Glossary of Terms

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

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-Purchase Mortgage Loan

An alternative financing option that allows low- and moderate-income home buyers to lease a home 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 accumulates in a savings account for a down payment.

Liabilities

A person’s financial obligations. Liabilities include long-term and short-term debt.

Lien

A claim upon a piece of property for the payment or satisfaction of a debt or obligation.

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.

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.

Loan

A sum of borrowed money (principal) that is generally repaid with interest.

Loan-to-Value Ratio

The relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage.

Lock

Lender’s guarantee that the mortgage rate quoted will be good for a specific number of days from day of application.