Glossary

We’ve put together an extensive glossary of terms used in the mortgage lending business. If you’re not sure what a particular term means, click to find the definition in our glossary.

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

L

Late Charge

The penalty a borrower must pay when a payment is made a stated number of days (usually 10-15) after the due date.

Lease

A written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may use the real estate for a specified period of time and the amount of rent to be paid.

Leasehold Estate

A tenant's interest in or right to hold possession of a property.

Legal Description

A property description, recognized by law, using a government rectangular survey, metes and bounds, or a plat map to sufficiently locate and identify a property.

Lender's Fees

Fees paid to the lender to cover costs associated with processing, underwriting and closing of the loan.

Liabilities

A person's debts or financial obligations. Liabilities include long-term and short-term debt, as well as potential losses from legal claims.

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. See also homeowners insurance.

Lien

A legal claim against a property that must be paid off when the property is sold. A lien is created when you borrow money to purchase or refinance a home loan or and with obtain a home equity loan.

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/Loan Amount

The entire HELOC or Fixed Rate Second mortgage loan amount.

Line Of Credit

An agreement by a lender to extend credit up to a certain amount for a certain time without the need for the borrower to file another application. See home equity line of credit.

Liquid Asset

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

Loan Amount

A sum of borrowed money (principal) that is generally repaid over time with interest.

Loan Commitment

A lender's agreement to advance money on specified terms after specified conditions are met. See commitment letter.

Loan Origination

The process by which a mortgage lender makes a home loan and records a mortgage against the borrower's real property as security for repayment of the loan.

Loan-To-Value (LTV) Ratio

The ratio of the total amount borrowed on a mortgage against a property compared to the appraised value of the property. For example, if you have an $80,000 1st mortgage on a home with an appraised value of $100,000, the LTV is 80% ($80,000 / $100,000 = 80%).

Lock-In

A written agreement in which the lender guarantees a specified loan program interest rate and points if a mortgage goes to closing within a set period of time.

Lock-In Period

The time period during which the lender has guaranteed an interest rate to a borrower. See lock-in.