Definitions (L)

Real Estate Glossary - Meanings, Terms, & Acronyms

LAND ACQUISITION LOAN
A loan made for the purpose of purchasing land only, not improvements on or to the land. Also called an “acquisition loan” or “lot loan.”

LATE CHARGE

The penalty a borrower must pay when a payment is made after its due date or courtesy period.

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."

LENDER PAID MORTGAGE INSURANCE (LPMI)

Mortgage insurance with its cost included in the interest rate. Although the interest rate is slightly higher with LPMI, this option usually results in a lower monthly payment and a potential tax deduction. (Consult your tax advisor).

LETTERS OF TESTAMENTARY
A court order empowering an individual to deal with a deceased person’s estate.

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.

LIFE ESTATE

The interest in property that exists only for the life of an individual.

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.

LIMITED PARTNERSHIP

A form of business ownership that consists of one or more general partners who are fully liable, and one or more limited partners who are liable only for the amount of their investment.

LINE OF CREDIT
An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain length of time, based upon the loan’s purpose, the borrower’s ability to repay, and the collateral for the line. (See also Home Equity Line of Credit.)

LIQUIDITY

The ability to readily convert assets or investments to cash.

LIS PENDENS
A notice filed on public record for the purposes of notifying all persons that a certain property is under litigation.

LIST DATE
Actual date the property was listed with the current broker.

LIST PRICE
The price of a property through a listing agreement.

LISTING
Brokers written agreement to represent a seller and their property. Agents refer to their inventory of agreements with sellers as listings.

LISTING AGENT
The real estate sales agent that is representing the sellers and their property, through a listing agreement.

LISTING AGREEMENT

A document that establishes the real estate agent’s agreement with the sellers to represent their property in the market.

LISTING APPOINTMENT
The time when a real estate sales agent meets with potential clients selling a property to secure a listing agreement.

LITIGATION
A legal action or process.

LOAN
An amount of money that is lent to a borrower who agrees to repay the amount plus interest.

LOAN APPLICATION

A document that buyers who are requesting a loan fill out and submit to their lender.

LOAN CLOSING COSTS

The costs a lender charges to close a borrower’s loan. These costs vary from lender to lender and from market to market.

LOAN COMMITMENT
A written document telling the borrowers that the mortgage company has agreed to lend them a specific amount of money at a specific interest rate for a specific period of time. The loan commitment may also contain conditions upon which the loan commitment is based.

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 MODIFICATION
A written agreement that permanently changes an original note term, such as the interest rate, monthly payment, and/or the principal balance due to capitalization of interest or advances.

LOAN ORIGINATION
How a lender refers to the process of obtaining new loans.

LOAN PACKAGE
The group of mortgage documents that the borrower’s lender sends to the closing or escrow.

LOAN PRODUCT

Describes the type of loan and includes fixed- or adjustable-rate (ARM) options; the loan term, which is the time you will spend repaying the loan; and whether the loan is insured by a government agency (such as the FHA or VA), or non-government loan.

LOAN PURPOSE
Indicates whether the loan is intended for purchasing or refinancing real estate.

LOAN PROCESSOR
An administrative individual who is assigned to check, verify, and assemble all of the documents and the buyer’s funds and the borrower’s loan for closing.

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).

LOAN UNDERWRITER

One who underwrites a loan for another. Some lenders have investors underwrite a buyer’s loan.

LOCKBOX
A tool that allows secure storage of property keys on the premises for agent use. A combo uses a rotating dial to gain access with a combination; a Supra® (electronic lockbox or ELB) features a keypad.

LOCK EXPIRATION DATE
The interest rate range can only be locked for a set number of days. The rate lock option will expire after the lock expiration date.

LOCK-IN PERIOD
The number of days before a loan closing in which a customer’s loan is protected from financial market fluctuations in interest rates. Locking in an interest rate range doesn’t guarantee the specific rate that applies at closing. The final interest rate is determined by specific transaction characteristics and the borrower's credit profile up until loan closing.

LONDON INTERBANK OFFERED RATE (LIBOR)

The rate at which banks in the foreign market lend dollars to one another. LIBOR varies by deposit maturity. A common interest rate index; one of the most valid barometers of the international cost of money.

LOSS PAYABLE CLAUSE
An insurance policy provision for payment of a claim to someone, other than the insured, who holds an insurable interest in the insured property.