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REAL ESTATE GLOSSARY
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LAND CONTRACT
A real estate installment selling arrangement whereby the buyer may use and occupy land, but no deed is given by seller until the sales price has been paid.
LATE CHARGE
The penalty a borrower must pay when a payment is made a stated number of days (usually 15) after the due date.
LATENT DEFECTS
Any defect in a piece of property which is not readily apparent, but which has an impact of the value. Structural damage or termite infestation would be examples of latent defects.
LEASE
A contract between a property owner and a tenant specifying the payment amount, terms and conditions, as well as the length of time the contract will be in force.
LEASEE
A person to whom property is rented under a lease. (Tenant)
LEASEHOLD ESTATE
A type of property ''ownership'' where the buyer actually has a long-term lease on the property.
LEASE OPTION
A lease agreement that gives the tenant an option to buy the property. Usually, a portion of the regular monthly rent payment will be applied towards the down payment.
LEASE WITH OPTION TO PURCHASE
A lease under which the lessee has the right to purchase the property. The option may run for a portion or for the full length of the lease
LEASE-PURCHASE MORTGAGE LOAN
An alternative financing option that allows low- and moderate-income home buyers to lease a home from a nonprofit organization with an option to buy. Each month's rent payment consists of principal, interest, taxes and insurance (PITI) payments on the first mortgage plus an extra amount that is earmarked for deposit to a savings account in which money for a downpayment will accumulate.
LEASSOR
A person who rents property to another under a lease. (Landlord)
LEGAL DESCRIPTION
The description of a piece of property, identifying its specific location in terms established by the municipality or other jurisdiction in which the property resides. Often related in specific distances from a known landmark or intersection.
LENDER
The person or entity who loans funds to a buyer. In return, the lender will receive periodic payments, including principal and interest amounts.
LEVERAGE
Using someone else's money for the purchase of property.
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 that covers against potential lawsuit brought against a property owner for alleged negligence resulting in damage to another party.
LIBOR
The London Interbank Offered Rate Index (LIBOR) is an average of the interest rates that major international banks charge each other to borrow U.S. dollars in the London money market. Like the U.S. treasury the CD indexes, LIBOR tends to move and adjust quite rapidly to changes in interest rates.
LIEN
A claim or charge against property. Property is said to be encumbered by a lien and the lien must be removed to clear title
LIFE CAP
A limit on how far the interest rate can move for an Adjustable Rate Mortgage.
LIFE ESTATE
An estate in real property for the life of a living person. The estate then reverts back to the grantor or to a third party.
LIKE-KIND PROPERTY
Any property which is substantially similar to another property.
LINE OF CREDIT
An extension of credit for a certain amount for a specific amount of time. To be used by the borrower at his discretion.
LIQUID ASSET
Any asset which can be quickly converted into cash at little or no cost, or cash itself.
LIS PENDENS
Latin for "lawsuit pending." Recorded notice that litigation is pending on a property. Most lenders will require the clearance of the Lis Pendens prior to closing.
LOAN
Money borrowed, to be repaid with interest, according to the specific terms and conditions of the loan.
LOAN AMOUNT
The amount of money that you intend on borrowing from a financial institution for the purchase of your home. Subtracting the down payment from the purchase price of the home will provide you with the loan amount.
LOAN APPLICATION
A document required by a lender prior to loan approval. The application includes detailed information about the borrower and the property.
LOAN OFFICER
An intermediary between lending institutions and borrowers, loan officers solicit loans, represent creditors to borrowers, and represent borrowers to creditors.
LOAN ORIGINATION
How a lender refers to the process of writing new loans.
LOAN ORIGINATION FEE OR POINTS
Charge by a lender or broker connected with originating a loan. This is different from discount points which are used to buy down the rate of interest.
LOAN SERVICING
The processing of payments, mailing of monthly statements, management and disbursement of escrow funds etc Typically carried out by the company you make payments to.
LOAN-TO-VALUE RATIO (LTV)
The relationship between the principal balance of the mortgage and the appraised value (or sales price if it is lower) of the property. For example, a $100,000 home with an $80,000 mortgage has a LTV percentage of 80 percent.
LOCK-IN
An agreement between a lender and a borrower, guaranteeing an interest rate for a loan if the loan is closed within a certain amount of time.
LOCK-In CLAUSE
Clause in a loan agreement that states that the borrower cannot repay a loan prior to a specified date.
LOCK-IN PERIOD
The amount of time the lender has guaranteed an interest rate to a borrower.
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