REAL ESTATE GLOSSARY
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lease
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.
leasehold estate
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.
lease option
An alternative financing option that allows home buyers to
lease a home with an option to buy. Each month's 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.
legal description
A property description, recognized by law, that is
sufficient to locate and identify the property without oral
testimony.
lender
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
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. It is usually part of a homeowner's insurance
policy.
lien
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
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
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
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 officer
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
How a lender refers to the process of obtaining new loans.
loan servicing
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)
The percentage relationship between the amount of the loan
and the appraised value or sales price (whichever is lower).
lock-in
An agreement in which the lender guarantees a specified
interest rate for a certain amount of time at a certain
cost.
lock-in period
The time period during which the lender has guaranteed an
interest rate to a borrower.
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