Mortgage Glossary
There are a lot of unfamiliar terms that get tossed around during the mortgage process. But don't worry, we've put together this glossary to help you get a better grasp of any terms that may be less than clear.
L
Lender Fees
Fees that are kept by the lender to cover some of their expenses and to meet their profitability goals. Typically fees such as origination fees, discount points, processing/administration fees, underwriting fees and document preparation fees are lender fees. This is the area of fees that you should compare very closely from lender to lender before making a decision.
Lessee
A person or company that signs a lease to get temporary use of property.
Lessor
A person or company that provides temporary use of property usually in return for periodic payment.
Liabilities
A person's financial obligations including both long-term and short-term debt, as well as any other amounts that are owed to others.
Liability Insurance
An insurance policy that offers protection against claims that a property owner's negligence resulted in bodily injury or property damage to another party.
Liability on an Account
Legal responsibility to repay debt.
LIBOR
See London Inter-bank Offered Rate.
Lien
A loan secured by real estate. An encumbrance against a property for money due. The lien can be voluntary such as a mortgage or involuntary such as a judgement.
Lien Certificate
A certificate to verify there are no claims by one person on the property of another as security for money owed.
Lifetime Interest Rate Cap
On an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the term of the loan.
Lifetime Payment Cap
On an adjustable-rate mortgage (ARM), a limit on the amount that payments can increase or decrease over the term of the loan.
Line of Credit
An agreement by a financial institution to extend credit up to a certain amount for a certain time to a specified borrower.
Liquid Asset
An asset that is easily converted into cash.
Loan
Borrowed money that is usually repaid with interest.
Loan Commitment
A written offer from a lender to provide financing to a borrower. The commitment letter states the terms under which the lender agrees to provide financing to the borrower. Also called a commitment letter.