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Late charge
A fee imposed by a lender when the borrower does not make a payment
on time.
Late payment
A payment a lender receives after the due date has passed.
Lease-Purchase
The lease purchase contract sets the closing date and provides
remedies to the seller if the buyer defaults. (a type of delayed
closing)
Leasehold
The limited interest in a property held by a tenant; primarily the
right to inhabit it for a specified period of time. At the end of
the lease, the property reverts to the owner or landlord.
Legal blemish
Blemishes on a piece of property such as a zoning violation or
fraudulent title claim.
Legal description
A specific way of identifying and locating a piece of real estate
that is acceptable to a court.
Lender
A bank, savings institution or mortgage company that offers home
loans.
Liabilities
A borrower's debts and financial obligations.
Liability insurance
An insurance policy that protects owners against claims of
negligence, personal injury or property damage.
LIBOR
Acronym for "London Interbank Offered Rate." An index used to
determine interest rate changes for adjustable rate mortgages.
Very popular index for interest only mortgage programs.
Lien
A claim laid by one person or company on the property of another as
security for money owed.
Life cap
Limits the amount a loan's interest rate can change during the
mortgage term. For example, if the rate on an adjustable-rate
mortgage begins at 4 percent and has a life cap of 6 percentage points,
it can not go over 10 percent.
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Lifetime
Payment Cap
For an adjustable-rate
mortgage (ARM), a limit on the amount payments can increase or decrease
over the life of the mortgage.
Lifetime Rate Cap
A maximum interest rate or "ceiling" that may not be exceeded under
any circumstances over the entire life of the loan.
Liquid
assets
Cash and all other assets that can be converted to cash relatively
quickly. Liquid assets can include money in savings and
checking accounts, money-market accounts and most CD's.
Loan
application
A document that details a borrower's income, debt and other
obligations to determine credit worthiness. Also includes
information on the subject property.
Loan application fee
A fee charged by lenders to cover expenses incidental to reviewing a
loan application.
Loan
commitment
A promise by a lender or other financial institution to make or
insure a loan for a specified amount and on specific terms.
Loan officer
An official lending institution representative who is empowered to
act on behalf of the lender within certain limits.
Loan
origination fee
A fee charged by lenders to cover the direct costs of arranging the
loan.
Loan term
The time set by a lender for a buyer to pay a mortgage. Most
conforming loans have 30 or 15-year terms.
Loan-to-value
ratio (LTV)
The ratio of the total loan amount to the value of the property.
For lending purposes, the property value is equal to the purchase
price or the appraised value, whichever is lower.
Lock-in
A lender's commitment to a borrower to guarantee (or "lock in") a
specific interest rate for a limited amount of time.
Lock-in
period
A period of time during which the borrower is guaranteed an
agreed-upon interest rate, even if market rates rise. The longer
the period, the higher the cost (in points) to the borrower.
Low-documentation loan
A home loan that requires only minimal verification of income and
assets.
LTV (loan-to-value ratio)
The ratio of the total loan amount to the value of the property.
For lending purposes, the property value is equal to the purchase
price or the appraised value, whichever is lower.
Maintenance fee
The monthly assessment paid by homeowners' association members for
the repair and maintenance of common areas.
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Margin
A percentage added to the index and fixed for the life of the loan.
When the initial interest rate on an adjustable-rate loan has
expired, the interest rate moves toward the sum of its index plus a
margin.
Market value
The price a piece of property sells for at a particular point in
time.
Merged credit report
A report that draws information from the three (3) main
credit-reporting agencies incvluding: Equifax, Experian and Trans
Union.
Modification
A change in the terms of a loan agreement.
Modified annual percentage rate
(APR)
The modified APR is an index of loan cost based on the standard APR
and adjusted for the time the borrower expects to hold the loan.
Monthly
association dues
A payment due monthly to a homeowners' association for maintenance
and communal expenses.
Mortgage
A sum of money borrowed to purchase a home using the property as
collateral. A mortgage is the legal document that pledges the
property as collateral for a loan.
Mortgage acceleration clause
A clause that allows a mortgage lender to demand repayment of the
entire loan balance in a lump sum under certain circumstances, such
as when the home is sold, title is changed, the loan is refinanced
or the borrower defaults on a scheduled payment.
Mortgage banker
A company that provides home loans using its own money. The loans
are usually sold to investors such as insurance companies and Fannie
Mae.
Mortgage broker
An individual that matches lenders with prospective borrowers who
meet the criteria of lenders the broker is approved to deal with.
Mortgage
broker business
A company that matches lenders with prospective borrowers who
meet the criteria of lenders the broker is approved to deal with.
The mortgage broker business does not keep or make the loan, but
receives payment from the lender for services.
Mortgage
insurance
Required by lenders on some loans to protect lenders from a possible
default. Most conventional loans with down payments or home equity
percentages that are less than 20 percent of the home value require
private mortgage insurance (PMI).
Mortgage life insurance
Insurance that will pay off a mortgage if the borrower dies before
the debt is retired.
Mortgage Interest deduction
The tax write-off that the Internal Revenue Service allows most
owners to claim for annual interest payments made on real estate loans.
Mortgagee
A bank or other financial institution that lends money to the
borrower. The borrower is considered the mortgagor.
Mortgagor
The person who borrows money to purchase a house. The lender
is called the mortgagee.
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