late
charge
The penalty a borrower must pay when a payment is made a
stated number of days (usually 15) after the due date.
lease
A written agreement between the property owner and a tenant
that stipulates the conditions under which the tenant may
possess the real estate for a specified period of time and
rent.
leasehold
estate
A way of holding title to a property wherein the mortgagor
does not actually own the property but rather has a recorded
long-term lease on it.
lease-purchase
mortgage loan
An alternative financing option that allows low- and moderate-income
home buyers to lease a home from a nonprofit organization
with an option to buy. Each month's rent payment consists
of principal, interest, taxes and insurance (PITI) payments
on the first mortgage plus an extra amount that is earmarked
for deposit to a savings account in which money for a downpayment
will accumulate.
legal
description
A property description, recognized by law, that is sufficient
to locate and identify the property without oral testimony.
liabilities
A person's financial obligations. Liabilities include long-term
and short-term debt, as well as any other amounts that are
owed to others.
liability
insurance
Insurance coverage that offers protection against claims
alleging that a property owner's negligence or inappropriate
action resulted in bodily injury or property damage to another
party.
lien
A legal claim against a property that must be paid off when
the property is sold.
lifetime
payment cap
For an adjustable-rate mortgage (ARM), a limit on the amount
that payments can increase or decrease over the life of
the mortgage. See
cap.
lifetime
rate cap
For an adjustable-rate mortgage (ARM), a limit on the amount
that the interest rate can increase or decrease over the
life of the loan. See
cap.
line
of credit
An agreement by a commercial bank or other financial institution
to extend credit up to a certain amount for a certain time
to a specified borrower. See
home
equity line of credit.
liquid
asset
A cash asset or an asset that is easily converted into cash.
loan
A sum of borrowed money (principal) that is generally repaid
with interest.
loan
commitment
See
commitment letter.
loan
origination
The process by which a mortgage lender brings into existence
a mortgage secured by real property.
loan-to-value
(LTV) percentage
The relationship between the principal balance of the mortgage
and the appraised value (or sales price if it is lower)
of the property. For example, a $100,000 home with an $80,000
mortgage has a LTV percentage of 80 percent.
lock-in
A written agreement in which the lender guarantees a specified
interest rate if a mortgage goes to closing within a set
period of time. The lock-in also usually specifies the number
of points to be paid at closing.
lock-in
period
The time period during which the lender has guaranteed an
interest rate to a borrower. See
lock-in.
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