Mortgage Glossary

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 - 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.

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.

Lien - A legal claim against a property that must be paid off when the property is sold.

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.

Liquid Asset - A cash asset or an asset that is easily converted into cash.

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

Loan Origination - The process by which a mortgage lender brings into existence a mortgage secured by real property.

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.

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.

Lock-in Period - The time period during which the lender has guaranteed an interest rate to a borrower. See lock-in.