Glossary (L)

Terms commonly used in the real estate and mortgage marketplace.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Late Charge

A penalty imposed by the lender when a borrower fails to make a scheduled payment on time.

Lease-Purchase Option

An option sometimes used by sellers to rent a property to a consumer, who has the option to buy the home within a specified period of time. Typically, part of each rental payment is put aside for the purpose of accumulating funds to pay the down payment and closing costs.

Liabilities

A person’s debts and other financial obligations.

Liability Insurance

Insurance coverage that protects property owners against claims of negligence, personal injury or property damage to another party.

LIBOR-Index

An index used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans, based on the average interest rate at which international banks lend to or borrow funds from the London Interbank Market.

Lien

A claim or charge on property for payment of a debt. With a mortgage, the lender has the right to take the title to your property if you don’t make the mortgage payments.

Lifetime Cap

For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate or monthly payment can increase or decrease over the life of the loan.

Liquid Asset

A cash asset or an asset that is easily converted into cash.

Loan Origination

The process by which a loan is made, which may include taking a loan application, processing and underwriting the application, and closing the loan.

Loan Origination Fees

Fees paid to your mortgage lender or broker for processing the mortgage application. This fee is usually in the form of points. One point equals one percent of the mortgage amount.

Loan-To-Value (LTV) Ratio

The relationship between the loan amount and the value of the property (the lower of appraised value or sales price), expressed as a percentage of the property’s value. For example, a $100,000 home with an $80,000 mortgage has an LTV of 80 percent.

Lock-In Rate

A written agreement guaranteeing a specific mortgage interest rate for a certain amount of time.

Low-Down-Payment Feature

A feature of some mortgages, usually fixed-rate mortgages, that helps you buy a home with a low down payment.