It is the settlement of a legal claim like a mortgage debt made when a property is sold. If there is more than one debt, each debt considered a lien, is paid off in order.
Loan to value ratio (LTV)
It is the ratio of the home loan taken to the appraised value or the sale price, whichever is lower. Lower the LTV, better are the terms offered to the borrower.
An agreement in which the home buyer is guaranteed a specified rate of interest, provided the loan deal is closed within a certain period of time, It also includes the cost to be paid at closing.
Making deposits into investments, such as CDs, on staggering dates to vary the rates of return.
An agreement for the purchase of property where the buyer is allowed to take possession of the land while making payments but the seller holds the title until the last payment is completed.
A charge assessed on the borrower for not making the loan payment on time.
Late payment fee
A fee charged to the borrower for not making the payment on time.
A problem with the property that cannot be easily seen. These defects can include the presence of radon, asbestos, or hidden pests, like termites.
An agreement where the property's owner allows a tenant to use the property in exchange for monies for a set amount of time. This may also pertain to an automobile where the borrower uses the vehicle for a set amount of time in exchange for lease payments. At the end of the lease period, the borrower gives the car back to the dealer or arranges to buy the automobile.
Extending a lease on a property or car past the original end date, typically on a month to month basis.
The right to buy the property for a designated price at the end of the original lease period.
A loan which originates from a credit union and will save the borrower as much as 30 percent due to a big balloon payment at the end of the loan period. This loan may combine features of an auto loan and a lease. There is no down payment or security deposit required.
Lease purchase mortgage
An option for a potential homebuyer which will allow you to lease a property with the option to buy. The mortgage is often constructed so that the monthly payment will cover the owner's rent and a little extra which is put into an account and can be used for a down payment at the end of the lease.
A tenant's right to use the property for a specific time period.
The person who signs for the lease.
The person who is granting a lease.
Letter of intent
This is a formal notice that the buyer is serious about purchasing the property but is not legally enforceable.
The use of a large loan and a small amount of cash to make a purchase.
All of the borrower's debts and legal obligations.
A part of the owner's auto insurance policy that will cover injuries and damage that you, the driver, cause to other drivers and their vehicles when you are at fault in a car accident.
Part of the home owner's insurance policy that protects the home owner against claims from other people for personal injury or property damage.
LIBOR (London Interbank Offered Rate)
A daily reference rate based on short-term interest rates charged among banks in the foreign money market. LIBOR rates are commonly used as a reference rate or index for adjustable-rate mortgages.
A limit or ceiling on the amount a borrower's interest rate can increase or decrease over the life of the loan.
An account option made mandatory in many states which allows low income customers to have a checking account or savings account. These accounts are basic accounts which incur no monthly fees and require no minimum deposit.
Lifetime learning credit
A tax credit available for a portion of qualified tuition, education, and all related costs. This credit can be claimed for anyone is the taxpayer's family.
Lifetime rate cap
This cap limits the amount that an interest rate can increase or decrease in an adjustable rate mortgage of the life of the mortgage.
Line of credit
The maximum amount a financial institution is committed to lend to a borrower during a designated time period.
Property and cash that is easily accessible and can be turned into fast cash.
When the debtor's property is sold and the proceeds are used to the benefit of the creditors.
The ability to convert assets into cash without losing significant value.
A notice which has been filed or recorded to alert all interested parties that there is pending real estate lawsuit over the title or piece of property.
The bottom line price as established by the manufacturer. It is a good practice to not purchase items at list price.
The green light or authorization for a real estate agent to market and sell a piece of land or home.
The documentation necessary for applying for a loan which lists and highlights the potential borrower's financial situation.
Loan application fee
A fee charged by the lender in order to accept and process the loan application.
Usually referenced in terms of student loans. This process allows students to combine several educational loans into one new loan, extending the loan repayment period, and permitting one monthly payment. This is generally a relief to newly graduated students since the combined loan repayment is substantially less than paying several loans each month.
A federal crime committed when a borrower gives false information on a loan application in order to qualify for a better loan.
When a mortgage lender receives a mortgage which is secured by real property. Also described as the process by which a lender comes to obtain a loan.
Loan origination fee
A fee assessed by the lender for underwriting a loan. This fee covers the time and preparation associated with the inception of a new loan.
Loan processing fee
Similar to a loan origination fee. A fee charged by the lender for accepting a new loan application and gathering all the necessary documentation.
The process of collecting and managing monthly payments. Typically a separate company which processes the payments, sends statements, manages the escrow/impound accounts and makes sure that taxes and insurance premiums made on time. Sallie Mae is an example of a company who services student loan accounts.
The period of time in which the borrower has to repay the loan as specified in the original loan contract. Auto loans are typically 4 years, whereas mortgages have a loan term of 15 or 30 years.
The guarantee you should receive from your lender stating that the mortgage rate quoted will not change for a set amount of time. You want to the lock to stay in effect until closing.
Lock and float
A situation where a borrower can lock in an interest rate on a mortgage over a specific amount of time while also letting the rate float down if the market improves before the closing date.
Long term capital gain or loss
Your total profit or loss from a capital asset that was yours for a period of more than 12 months.
A situation where the lender will help the borrower when they are in danger of default to avoid foreclosure.
Low documentation loan
A loan designed for persons' that are self employed, recent immigrants, or entrepreneurs that may not want to reveal information of their incomes. These loans require exceptional credit history, a substantial down payment, and incur a higher interest rate.
A loan where the down payment is under 10 percent. The US government has made these types of loans more available through agencies like Fannie Mae, to help more people own a home.
An offer on a piece of property that is way below the market value.