Judgment: a legal decision; when requiring debt repayment, a judgment
may include a property lien that secures the creditor's claim by
providing a collateral source.
Lease purchase: assists low- to moderate-income homebuyers in
purchasing a home by allowing them to lease a home with an option
to buy; the rent payment is made up of the monthly rental payment
plus an additional amount that is credited to an account for use
as a down payment.
Lien: a legal claim
against property that must be satisfied When the property is sold
Loan: money borrowed that is usually repaid with interest.
Loan fraud: purposely giving incorrect information on a loan application
in order to better qualify for a loan; may result in civil liability
or criminal penalties.
Loan-to-value (LTV) ratio:
a percentage calculated by dividing the amount borrowed by the
price or appraised value of the home to be purchased; the higher
the LTV, the less cash a borrower is required to pay as down payment.
Lock-in: since interest
rates can change frequently, many lenders offer an interest rate
lock-in that guarantees a specific interest rate if the loan is
closed within a specific time. For more information, see our guide
mortgage interest rate lock-ins work.
Loss mitigation: a process to avoid foreclosure; the lender tries
to help a borrower who has been unable to make loan payments and
is in danger of defaulting on his or her loan
Margin: the number of percentage points the lender adds to the index rate to calculate the interest rate at each adjustment on an
adjustable rate mortgage (ARM). For more information, see our guide explaining
margins are used in adjustable rate mortgages.
Mortgage: a lien on the property that secures the Promise to repay
a company that originates loans and resells them to secondary mortgage
lenders like Fannie Mae or Freddie Mac.
Mortgage broker: a firm that originates and processes loans for
a number of lenders.
Mortgage insurance: a policy that protects lenders against some
or most of the losses that can occur when a borrower defaults on
a mortgage loan; mortgage insurance is required primarily for borrowers
with a down payment of less than 20% of the home's purchase price.
Mortgage insurance premium (MIP): a monthly payment -usually part
of the mortgage payment - paid by a borrower for mortgage insurance.
Mortgage Modification: a loss mitigation option that allows a
borrower to refinance and/or extend the term of the mortgage loan
and thus reduce the monthly payments.
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is subject to change, and may not apply to all individual circumstances.
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