Home  Resources Glossary RD Glossary - lease
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A written agreement between the property owner and a tenant that stipulates the payment and conditions under which the tenant may possess the real estate for a specified period of time.
- lease option
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An alternative financing option that allows home buyers to lease a home with an option to buy. Each months 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.
- leasehold estate
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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.
- legal description
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A property description, recognized by law, that is sufficient to locate and identify the property without oral testimony.
- lender
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A term which can refer to the institution making the loan or to the individual representing the firm. For example, loan officers are often referred to as "lenders."
- liabilities
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A persons financial obligations. Liabilities include long-term and short-term debt, as well as any other amounts that are owed to others.
- liability insurance
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Insurance coverage that offers protection against claims alleging that a property owners 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
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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
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For an adjustable-rate mortgage (ARM), a limit on the amount that the enterest rate can increase or decrease over the life of the mortgage.
- line of credit
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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.
- liquid asset
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A cash asset or an asset that is easily converted into cash.
- loan
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A sum of borrowed money (principal) that is generally repaid with interest.
- loan officer
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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
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How a lender refers to the process of obtaining new loans.
- loan servicing
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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)
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The percentage relationship between the amount of the loan and the appraised value or sales price (whichever is lower).
- lock-in
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An agreement in which the lender guarantees a specified interest rate for a certain amount of time at a certain cost.
- lock-in period
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The time period during which the lender has guaranteed an interest rate to a borrower.
- margin
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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
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The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable.
- merged credit report
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A credit report which reports the raw data pulled from two or more of the major credit repositories. Contrast with a Residential Mortgage Credit Report (RMCR) or a standard factual credit report.
- modification
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Occasionally, a lender will agree to modify the terms of your mortgage without requiring you t refinance. If any changes are made, it is called a modification.
- mortgage
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A legal document that pledges a property to the lender as security for payment of a debt. Instead of mortgages, some states use First Trust Deeds.
- mortgage banker
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For a more complete discussion of mortgage banker, see "Types of Lenders." A mortgage banker is generally assumed to originate and fund their own loans, which are then sold on the secondary market, usually to Fannie Mae, Freddie Mac, or Ginnie Mae. However, firms rather loosely apply this term to themselves, whether they are true mortgage bankers or simply mortgage brokers or correspondents.
- mortgage broker
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A mortgage company that originates loans, then places those loans with a variety of other lending institutions with whom they usually have pre-established relationships.
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