Vocabulary III Flashcards
leasehold estate
A way of holding title to a property wherein the mortgagor does not actually own
the property but rather has a recorded long-term lease on it.
lease option
An alternative financing option that allows home buyers to lease a home with an
option to buy. Each month’s rent payment may consist of not only the rent, but an
additional amount which can be applied toward the down payment on an already
specified price.
legal description
A property description, recognized by law, that is sufficient to locate and identify
the property without oral testimony.
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.
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. It is usually part of a homeowner’s insurance policy.
lien
A legal claim against a property that must be paid off when the property is sold. A
mortgage or first trust deed is considered a lien.
life 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 mortgage.
loan officer
Also referred to by a variety of other terms, such as lender, loan representative,
loan “rep,” account executive, and others. The loan officer serves several
functions and has various responsibilities: they solicit loans, they are the
representative of the lending institution, and they represent the borrower to the
lending institution.
loan origination
How a lender refers to the process of obtaining new loans.
loan servicing
After you obtain a loan, the company you make the payments to is “servicing”
your loan. They process payments, send statements, manage the
escrow/impound account, provide collection efforts on delinquent loans, ensure
that insurance and property taxes are made on the property, handle pay-offs and
assumptions, and provide a variety of other services.
loan-to-value (LTV)
The percentage relationship between the amount of the loan and the appraised
value or sales price (whichever is lower).
lock-in
An agreement in which the lender guarantees a specified interest rate for a
certain amount of time at a certain cost.
lock-in period
The time period during which the lender has guaranteed an interest rate to a
borrower.
margin
The difference between the interest rate and the index on an adjustable rate
mortgage. The margin remains stable over the life of the loan. It is the index
which moves up and down.
maturity
The date on which the principal balance of a loan, bond, or other financial
instrument becomes due and payable.
