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. |
|
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. |
|
Lease-purchase Option | |
Nonprofit organizations may use the lease-purchase option to purchase a home that they then rent to a consumer, or "leaseholder." The leaseholder has the option to buy the home after a designated period of time (usually three or five years). Part of each rent payment is put aside toward savings for the purpose of accumulating the down payment and closing costs. |
|
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. |
|
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. |
|
LIBOR-based ARMs | |
The London Interbank Offered Rate (LIBOR) is based on the interest rate that major international banks are willing to lend and borrow funds for a specified period of time in the London interbank market. The LIBOR is similar to the prime-lending rate posted by major U.S. banks. You can select an adjustable rate mortgage (ARM) that adjusts to the LIBOR at specified periods, usually every six months. This type of ARM typically has a per-adjustment period cap of 1 percent and is offered with either a 5 percent or a 6 percent lifetime rate cap. |
|
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. |
|
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. |
|
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 Application | |
The loan application is a detailed form designed to provide information from you that your lender will need. Lenders use the application to evaluate whether or not they can give you a loan, and if so, the amount of money they can lend you. The "four Cs" of credit come into play when filling out an application -- they are capacity, credit history, capital and collateral. |
|
Loan Commitment | |
The commitment letter states the dollar amount of the loan being offered, the number of years you have to repay the loan, the loan origination fee, the points, the annual percentage rate, and the monthly charges. |
|
Loan Origination | |
The process by which a mortgage lender brings into existence a mortgage secured by real property. |
|
Loan Origination Fee | |
The loan origination fee covers the administrative costs of processing the loan. It is often expressed in points. One point is 1 percent of the mortgage amount. |
|
Loan Terms and Conditions | |
With a reverse mortgage, a lender can call in your loan under certain conditions. But, if you occupy the property as your primary residence, are not absent from the property for 12 consecutive months. |
|
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. |