Real Estate Glossary L

L

late charge

The penalty a borrower must pay when a payment is made a stated number of days (usually 10-15) after the due date.

lease

A lease is a written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may use the real estate for a specified period of time and the amount of rent to be paid.

leasehold estate

A tenant's interest in or right to hold possession of a property.

legal description

A property description, recognized by law, using a government rectangular survey, metes and bounds, or a plat map to sufficiently locate and identify a property.

Lender's fees

Fees paid to the lender to cover costs associated with processing, underwriting and closing of the loan.

liabilities

A person's debts or financial obligations. Liabilities include long-term and short-term debt, as well as potential losses from legal claims.

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. See also homeowners insurance.

lien

A legal claim against a property that must be paid off when the property is sold. A lien is created when you borrow money to purchase or refinance a home loan or and with obtain a home equity loan.

lifetime rate 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 loan. See cap.

Line/Loan Amount

The entire HELOC or Fixed rate Second mortgage loan amount.

line of credit

An agreement by a lender to extend credit up to a certain amount for a certain time without the need for the borrower to file another application. See home equity line of credit.

liquid asset

A cash asset or an asset that is easily converted into cash.

Loan amount

A sum of borrowed money (principal) that is generally repaid over time with interest.

loan commitment

A lender's agreement to advance money on specified terms after specified conditions are met. See commitment letter.

loan origination

The process by which a mortgage lender makes a home loan and records a mortgage against the borrower's real property as security for repayment of the loan.

loan-to-value (LTV) ratio

The ratio of the total amount borrowed on a mortgage against a property compared to the appraised value of the property. For example, if you have an $80,000 1st mortgage on a home with an appraised value of $100,000, the LTV is 80% ($80,000 / $100,000 = 80%).

lock-in

A written agreement in which the lender guarantees a specified loan program interest rate and points if a mortgage goes to closing within a set period of time.

lock-in period

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

Luxury Property

Luxury real estate in any particular region is generally defined as property worth more than a certain lower limit; for instance, homes worth more than $1 million in the United States are generally classified as Luxury real estate. The classification also takes into account the presence of surrounding homes, amenities, views, waterfronts, absence of crime-rate, industrialization or unwanted commercialization, customizations of the home, and historical or architectural significance