Mortgage and Loan Glossary (L)
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laches
Undue delay or negligence in asserting one's legal rights.
land
Any part of the surface of the earth.
land banking
The business of buying land that is not currently needed for use.
land contract
A property installment selling agreement whereby the purchaser may
occupy and use the land, but no deed is given buy the seller until
a specified part of the sales price has been paid.
late charge
The penalty a borrower must pay when a payment is made after the stated
due date.
late payment
A payment made later than agreed upon in a credit contract and on which
additional charges may be imposed.
lease
A written contract between a property owner and a tenant that expresses
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 instead has a long-term recorded lease
on it.
lease-purchase mortgage loan
A creative financing option that allows low-income homebuyers 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,
plus an extra amount that is deposited into a savings account created
for a down payment.
legal description
A legal property description that is sufficient to locate and identify
the property without verbal testimony.
lessee
A person who signs a lease to get temporary use of property.
lessor
A company that provides temporary use of property usually in return
for periodic payment.
liabilities
A person's financial obligations including both long-term and short-term
debt, as well as any other amounts that are owed to others.
liability insurance
An insurance policy that offers protection against claims that a property
owner's negligence resulted in bodily injury or property damage to
another party.
liability on an account
Legal responsibility to repay debt.
LIBOR
See London Interbank Offered Rate.
lien
A legal claim against a property that must be paid off when the property
is sold.
lifetime payment cap
On an adjustable-rate mortgage (ARM), a limit on the amount that payments
can increase or decrease over the term of the loan.
lifetime interest rate cap
On an adjustable-rate mortgage (ARM), a limit on the amount that the
interest rate can increase or decrease over the term of the loan.
line of credit
An agreement by a financial institution to extend credit up to a certain
amount for a certain time to a specified borrower.
liquid asset
An asset that is easily converted into cash.
liquidated damages
A provision in a purchase contract that specifies the amount of damages
a seller will recover from the buyer if it is proven that the buyer
breached the contract.
listing agreement
An agreement between a real estate broker (agent) and a property owner
employing the agent to find a buyer for the property.
loan
Borrowed money that is usually repaid with interest.
loan conditions
Conditions imposed by a lender on a loan, which must be satisfied before
the lender will release the funds.
loan contingency
A condition in a purchase contract that allows a buyer to back out
of the contract if the buyer is unable to obtain a loan. The buyer
must remove the loan contingency (agree to proceed with the transaction)
within a specified amount of time, or withdraw from the contract.
loan origination
The process by which a mortgage lender creates a mortgage secured by
real property.
loan origination fee
A fee charged by most lenders to cover the direct costs of arranging
the loan; also called points. A point is 1 percent of the total loan
amount.
loan-to-value (LTV) ratio
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 $150,000 home with a $120,000 mortgage has a loan-to-value
ratio of 80 percent.
lock box
A small, securely locked box that is placed on a property to hold the
front door key for easy access by real estate agents. Only licensed
real estate professionals who are members of the local real estate
board have the key or combination to open the lock box. Modern lock
boxes are electronic, and are opened with a code that is different
for each agent. This way, there is a record of who has entered the
property.
lock-in
Written agreement in which a lender guarantees a specific interest
rate if a loan closes within a set period of time. The lock-in may
also specify the number of points to be paid at closing. Also called
a rate lock, or rate commitment.
London Interbank Offered Rate (LIBOR)
The rate that international banks dealing in Eurodollars charge each
other for large loans. Some domestic banks use this rate as an index
for adjustable rate mortgages.
LTV
See loan-to-value ratio.