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Glossary of Terms |
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Glossary of Terms
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Judgment Lien
A lien on the property of a debtor resulting from the
decree of a court.
Jumbo Loan
A loan that exceeds the mortgage amount eligible for
purchase by Fannie Mae or Freddie Mac. Also called
"nonconforming loan."
Junior Mortgage
A loan that is subordinate to the primary loan or
first-lien mortgage loan, such as a second or third
mortgage.
Late Charge
A penalty imposed by the lender when a borrower fails to
make a scheduled payment on time.
Lease-Purchase Option
An option sometimes used by sellers to rent a property
to a consumer, who has the option to buy the home within
a specified period of time. Typically, part of each
rental payment is put aside for the purpose of
accumulating funds to pay the down payment and closing
costs.
Liabilities
A person's debts and other financial obligations.
Liability Insurance
Insurance coverage that protects property owners against
claims of negligence, personal injury or property damage
to another party.
LIBOR-Index
An index used to determine interest rate changes for
certain ARM plans, based on the average interest rate at
which international banks lend to or borrow funds from
the London Interbank Market.
Lien
A legal encumbrance or claim on property as security for
a debt.
Lifetime Cap
For an adjustable-rate mortgage (ARM), a limit on the
amount that the interest rate or monthly payment can
increase or decrease over the life of the loan.
Liquid Asset
A cash asset or an asset that is easily converted into
cash.
Loan Origination
The process by which a lender makes a loan which may
include taking a loan application, processing and
underwriting the application, and closing the loan.
Loan Origination Fee
A fee to cover some of the administrative costs of
processing a loan. It is often expressed in points. One
point is equal to 1 percent of the loan amount.
Loan-To-Value (LTV) Ratio
The relationship between the loan amount and the value
of the property (the lower of appraised value or sales
price), expressed as a percentage of the property's
value. For example, a $100,000 home with an $80,000
mortgage has an LTV of 80 percent.
Lock-in
An agreement in which the lender agrees to "lock-in" the
borrower's interest rate for a set period of time before
closing.
Margin
For an adjustable-rate mortgage (ARM), the amount that
is added to the index to determine the interest rate on
each adjustment date, as stated in the note.
Maturity Date
The date on which a mortgage loan is scheduled to be
paid in full, as stated in the note.
Mortgage
A loan to finance the purchase of real estate, for which
the borrower pledges the real property as security for
the repayment of the loan. The borrower gives the lender
a lien on the property as collateral for the loan.
Mortgage Broker
An individual or firm that brings borrowers and lenders
together for the purpose of loan origination. A mortgage
broker typically takes loan applications and may process
loans, but generally does not use its own funds to close
the loan. Mortgage brokers often act as independent
contractors and not as an agent of the borrower or
lender.
Mortgage Insurance (MI)
Insurance that protects lenders against losses caused by
a borrower's default on a mortgage loan. MI typically is
required if the borrower's down payment is less than 20%
of the purchase price.
Mortgage Insurance Premium (MIP)
The amount paid by a borrower for mortgage insurance,
either to a government agency such as the Federal
Housing Administration (FHA) or to a private mortgage
insurance (PMI) company.
Mortgage Life Insurance
A type of insurance that will pay off a mortgage if the
borrower dies while the loan is outstanding; a form of
credit life insurance.
Mortgagee
The institution or individual to whom a mortgage is
given; the lender.
Mortgagor
The owner of real estate who pledges property as
security for the repayment of a debt; the borrower.
Multifamily Mortgage
A mortgage loan on a building with more than four
dwelling units.
Multifamily Properties
Typically, buildings with five or more dwelling units.
Note
A written promise to pay a specified amount under the
agreed upon conditions.
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