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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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