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L

Land Loans

This type of loan involves only land on which a structure has yet to be built.

Late charge

The penalty a borrower must pay when a payment is made a stated number of days (usually 10-15) after the due date.

Lease

A written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may use the real estate for a specified period of time and the amount of rent to be paid.

Leasehold estate

A tenant's interest in or right to hold possession of a property.

Legal description

A property description, recognized by law, using a government rectangular survey, metes and bounds, or a plat map to sufficiently locate and identify a property.

Lender

A person or business from whom one borrows or to whom one owes money. Also referred to as a creditor

Liabilities

A person's debts or financial obligations. Liabilities include long-term and short-term debt, as well as potential losses from legal claims.

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. See also homeowners insurance.

LIBOR Adjustables

LIBOR Adjustables can have an initial fixed period as short as 1 month to as longs as 10 years.  Generally, if your initial rate is fixed for more than 6 months (for example, 3, 5, or 7 years), the rate will then adjust after this period either every subsequent 6 months or 12 months.

LIBOR Loan

A LIBOR Loan is an Adjustable Rate Mortgage (ARM) that adjusts based on a specified LIBOR index.  LIBOR stands for "London Interbank Offered Rate", which is the interest rate offered by many London Banks for dollar deposits.  These deposits (and thus the indexes) are generally 1, 3, 6 or 12 months.

Lien

A legal claim against a property that must be paid off when the property is sold. A lien is created when you borrow money to purchase or refinance a home loan or and with obtain a home equity loan

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.

Line of Credit

An agreement by a lender to extend credit up to a certain amount for a certain time without the need for the borrower to file another application. See home equity line of credit.

Line/Loan Amount

The entire HELOC or Fixed Rate Second mortgage loan amount.

Liquid Asset

A cash asset or an asset that is easily converted into cash.

Loan

A loan is a type of debt. All material things can be lent but this article focuses exclusively on monetary loans. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the ' and the '.

Loan amount

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

Loan Application

A form used to apply for a mortgage loan that a borrower must complete in order to secure the loan. It has questions about the borrower’s income, assets and debts, plus some required disclosures.

Loan Approval

The lender agrees to make the loan to a borrower on a property. The approval should include, at a minimum, the interest rate, a summary of the terms of the loan and a date by which escrow must be closed.

Loan Broker

One, who for a fee, brings together a borrower and a lender, and handles the necessary applications for the borrower to obtain a loan against real property by giving a mortgage or deed of trust as security.

Loan commitment

A lender's agreement to advance money on specified terms after specified conditions are met. See commitment letter.

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 Loan Modification is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford.

Loan Origination

The process by which a mortgage lender makes a home loan and records a mortgage against the borrower's real property as security for repayment of the loan.

Loan Workout

A series of steps taken by a lender with a borrower to resolve the problem of delinquent loan payments. Steps can include rescheduling loan payments into lower installments over a longer period of time so that the entire outstanding principal is eventually repaid.

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