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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.
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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.
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Legal Description
A property description, recognized by
law, that is sufficient to locate and identify the property without oral
testimony.
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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.
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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.
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Lien
A legal claim against a property that
must be paid off when the property is sold.
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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.
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Liquid Asset
A cash asset or an asset that is easily
converted into cash.
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Loan
A sum of borrowed money (principal) that
is generally repaid with interest.
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Loan Application
The loan application is a detailed form
designed to provide information from you that your lender will need.
Lenders use the application to evaluate whether or not they can give you a
loan, and if so, the amount of money they can lend you. The "four
Cs" of credit come into play when filling out an application -- they
are capacity, credit history, capital and collateral.
The loan application form requests
information such as:
- bank account
balances and account numbers, as well as bank branch address
- information about
where you work or what sources of income you have
- outstanding debts
(including loans and credit cards with names and addresses of
creditors)
Information needed for the loan
application may vary from lender to lender, so prior to filling out the
application it's important to discuss with your lender what items your
lender will need.
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Loan Commitment
The commitment letter states the dollar
amount of the loan being offered, the number of years you have to repay
the loan, the loan origination fee, the points, the annual percentage
rate, and the monthly charges.
The letter also states the time you have
to accept the loan offer and to close the loan. Make sure you understand
all aspects of the commitment letter because by signing it, you indicate
your acceptance of its terms and conditions.
The commitment letter states the dollar
amount of the loan being offered, the number of years you have to repay
the loan, the loan origination fee, the points, the annual percentage
rate, and the monthly charges.
The letter also states the time you have
to accept the loan offer and to close the loan. Make sure you understand
all aspects of the commitment letter because by signing it, you indicate
your acceptance of its terms and conditions.
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Loan Limit
We operate exclusively in the secondary
mortgage market, where we help to ensure that money for mortgages is
available to home buyers in every state across the country. In keeping
with the mission to help more low-, moderate-, and middle-income people
buy homes, our loan limits are adjusted each year, in response to changes
in housing affordability nationwide.
The current loan limit for a
single-family home is $275,000.* The maximum amount for any mortgage in
Alaska, Hawaii, and the U.S. Virgin Islands is 50 percent higher than our
loan limits in the rest of the country.
Generally, any mortgage above this limit
is considered a "jumbo loan," and will carry a higher interest
rate. The amount of money you would save buying a home with a 30-year
mortgage financed by Fannie Mae can range from several thousand dollars to
as much as $24,600 over the life of a 30-year mortgage.
*The loan limit is $351,950 for a
two-family home; $425,400 for a three-family home; and $528,700 for a
four-family home.
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Loan Origination
The process by which a mortgage lender
brings into existence a mortgage secured by real property.
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Loan Origination Fee
The loan origination fee covers the
administrative costs of processing the loan. It is often expressed in
points. One point is 1 percent of the mortgage amount.
For example, a $100,000 mortgage with a loan origination fee of 1 point
would mean you pay $1,000.
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Loan Terms and Conditions
With a reverse mortgage, a lender can
call in your loan under certain conditions. But, if you occupy the
property as your primary residence, are not absent from the property for
12 consecutive months.
You may instruct the lender to pay the
taxes and insurance on your behalf from your reverse mortgage funds. The
lender will set aside funds from your reverse mortgage to pay for future
taxes and insurance, as long as funds are available.
Furthermore, as long as you comply with
the terms noted above, you can't be forced to sell your home to pay off
the reverse mortgage, even if the loan balance grows to exceed the value
of your property.
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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.
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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.
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Lock-in Period
The time period during which the lender
has guaranteed an interest rate to a borrower.
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