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VWXYZlate 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.