Glossary of Mortgage Terms
L
- Land Acquisition Loan
- A loan made for the purpose of purchasing land only, not improvements on or to the land. Also called an acquisition loan.
- Late Fees
- Fees that lenders are entitled to collect from borrowers who don't pay within the grace period. Also known as late charge.
- Lead Generation Site
- A mortgage web site designed to provide leads (potential customers) to lenders.
- Lease Purchase
- A lease agreement allowing a renter to lease a home with an option to buy. The rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment. Also known as "lease to own".
- Lender
- See mortgage lender.
- Lender Option Commitments
- An agreement giving a lender the option to deliver loans or securities by a certain date at agreed-upon terms.
- Lender Paid Mortgage Insurance ( LPMI )
- Insurance in which the cost of the mortgage insurance is included in the interest rate. Although the interest rate is slightly higher with LPMI, this option usually results in a lower monthly payment and a larger tax deduction.
- Liabilities
- Debts and other monetary obligations.
- LIBOR
- See London Interbank Offer Rate.
- Lien
- A claim upon a piece of property for the payment of a debt or obligation.
- Lifetime Cap
- A provision of an ARM that limits the total increase in interest rates over the life of the loan.
- Limited Partnership
- A form of business ownership that consists of one or more general partners who are fully liable, and one or more limited partners who are liable only for the amount of their investment.
- Line of Credit
- An agreement by a commercial bank or other financial institution to extend an open-ended line of credit up to a certain amount for a certain time to a specific borrower. See also home equity line of credit.
- Liquidity
- The ability to readily convert assets or investments to cash.
- Loan
- Money borrowed that is usually repaid with interest. Also termed "loan amount".
- Loan Discount Fee
- The term used to describe points on the Good Faith Estimate.
- Loan Flipping
- Considered a scam. The process of raising cash periodically through successive cash-out refinancings.
- Loan Fraud
- Purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.
- Loan Modification
- A change in the terms of a loan, usually the interest rate and/or term, in response to the borrower's inability to make the payments under the existing term.
- Loan Officer
- Employees of lenders or mortgage brokers who find borrowers, sell and counsel them, and take applications.
- Loan Origination Fees
- The fee paid to your mortgage lender for processing the mortgage application. This fee is usually in the form of points. One point equals 1% of the mortgage amount.
- Loan Provider
- A lender or a mortgage broker.
- Loan Servicing
- The tasks a lender performs to protect a mortgage investment, including collecting monthly payments from borrowers and dealing with delinquencies
- Loan-to-Value Ratio ( LTV )
- The relationship between the amount of the mortgage loan and appraised value of the property expressed as a percentage.
- Lock Commitment Letter
- A written statement from a lender verifying that the price and other terms of a loan have been locked.
- Lock Failure
- The inability or unwillingness of a lender to honor a mortgage price that a borrower had believed was guaranteed.
- Lock in
- Since interest rates can change frequently, many lenders offer an interest rate lock-in that guarantees a specific interest rate if the loan is closed within a specific time.
- Lock in Rate
- A written agreement guaranteeing a specific interest rate when your mortgage closes.
- Lock Jumper
- A borrower, usually refinancing rather than purchasing a home, who allows a lock to expire when interest rates go down in order to lock again at the lower rate.
- Lock Period
- The number of days for which any lock or float-down holds. Ordinarily, the longer the period, the higher the price to the borrower.
- London Inter Bank Offer Rate ( LIBOR )
- The rate of interest at which banks offer to lend money to one another in the wholesale money markets in London. It is a standard financial index used in U.S. capital markets. Commonly used an an index for interest only loans. Also referred to as the London Inter-bank Offered Rate.
- Loss Mitigation
- Activities designed to reduce either the likelihood of the corporation suffering financial losses on a loan or, the final dollar value of those losses in the event of a borrower default.
- Loss Payable Clause
- An insurance policy provision for payment of a claim to someone other than the insured, who holds an insurable interest in the insured property.
- Low Down Payment Feature
- A feature of a mortgage, usually a fixed-rate mortgage that helps you buy a home with as little as a 3% down payment.