Bankrate's financial glossary
Did you run across an unfamiliar term when applying for a mortgage, credit card
or auto loan? Find the meaning here, along with definitions of other financial words
and phrases, in Bankrate.com's financial glossary.
A financing option that allows a potential home buyer to lease a property with the option to buy. Often constructed so the monthly rent payment covers the owner's first mortgage payment, plus an additional amount as a savings deposit to accumulate cash for a down payment. A seller may agree to a lease-purchase option if the housing market is saturated and the seller is having difficult selling the property.
Lender and broker fees charged on the loan. These fees may vary from lender to lender. Fees such as underwriting, processing, administrative, lock, commitment, courier, etc., are included. Other closing costs such as title search/exam/insurance; prepaid insurance, taxes, interest; doc stamps, etc., are not included.
A legal hold or claim from one person on the property of another. The lien placed by a first mortgage is special; it is called the first lien and takes precedence over others.
Lifetime rate cap
In an adjustable rate mortgage (ARM), it limits the amount that the interest rate can increase or decrease over the life of the loan. See also caps.
A pending lawsuit; in real estate, the constructive notice filed in public records that a legal dispute exists over a piece of property.
The process by which a mortgage lender obtains a mortgage secured by real property. An origination fee is charged by the lender to process all the forms involved in obtaining a mortgage.
Loan-to-value (LTV) ratio
The ratio of the mortgage loan amount to the property's appraised value or selling price, whichever is less. For example, if a home is sold for $100,000 and the mortgage amount is $80,000, the house has an 80 percent LTV.
Lock or lock-in
Rate programs offered by companies that allow borrowers to lock in the current interest rate on a mortgage for a specified period of time, while also letting them "float" the rate down if market conditions improve before closing.
Mortgages with a low down payment, usually less than 10 percent. Fannie Mae and Freddie Mac design loan programs that spell out a set of standards for lenders. In recent years these government-chartered agencies have made low-down mortgages more available through programs such as Fannie Mae's Flexible 97 and Freddie Mac's Alt 97. The "97" refers to the amount of the home's value a lender will cover in a mortgage, leaving a low 3 percent down payment required.