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Glossary

LIBOR (London Interbank Offered Rate)

The interest rate at which banks in the foreign market can borrow money from each other. Frequently used for setting adjustable rate mortgage interest rates.

Lien

A legal claim against a property. All liens must be satisfied before the title is transferred at closing.

Lifetime Cap

A provision of an adjustable rate mortgage (ARM) that limits the highest interest rate allowed over the life of the loan. For example, a 6% interest rate with a 5% lifetime cap cannot exceed an 11% interest rate for the life of the loan. ARM lifetime caps vary and can be used for comparison when shopping for a loan.

Liquid Assets

Cash, or assets that can be quickly converted to cash.

Loan Amount

The amount you borrow from a lender to purchase a home.

Loan Estimate (LE)

A new form/disclosure that replaces the current Good Faith Estimate (GFE) and early Truth in Lending (TIL) disclosures that reflects the key features, costs and risk of the mortgage loan for which they are applying. The form must be provided to the consumer three business days after the application date.

Loan Program

A type of loan defined by its term and repayment features. Examples include: 30-year fixed rate mortgage, 10/1 ARM mortgage.

Loan Servicing

The term used to describe the collection and management of your monthly mortgage payment, which includes principal and interest. This typically includes processing payments, sending statements and managing escrow accounts.

Loan-to-Value Ratio (LTV)

A down payment risk assessment calculation used by lenders: The mortgage amount divided by the property's assessed value, expressed as a percentage. For example, a $150,000 loan divided by a property valued at $200,000 equals a 75% LTV loan ratio, and a down payment of 25%. If the lender requires a loan ratio of 80% or under (a 20% down payment), the example shows a favorable LTV. There are different maximum LTV limitations for different loan programs. A down payment risk assessment calculation used by lenders: The mortgage amount divided by the property's assessed value, expressed as a percentage. For example, a $150,000 loan divided by a property valued at $200,000 equals a 75% LTV loan ratio, and a down payment of 25%. If the lender requires a loan ratio of 80% or under (a 20% down payment), the example shows a favorable LTV. There are different maximum LTV limitations for different loan programs. A down payment risk assessment calculation used by lenders: The mortgage amount divided by the property's assessed value, expressed as a percentage. For example, a $150,000 loan divided by a property valued at $200,000 equals a 75% LTV loan ratio, and a down payment of 25%. If the lender requires a loan ratio of 80% or under (a 20% down payment), the example shows a favorable LTV. There are different maximum LTV limitations for different loan programs. A down payment risk assessment calculation used by lenders: The mortgage amount divided by the property's assessed value, expressed as a percentage. For example, a $150,000 loan divided by a property valued at $200,000 equals a 75% LTV loan ratio, and a down payment of 25%. If the lender requires a loan ratio of 80% or under (a 20% down payment), the example shows a favorable LTV. There are different maximum LTV limitations for different loan programs. A down payment risk assessment calculation used by lenders: The mortgage amount divided by the property's assessed value, expressed as a percentage. For example, a $150,000 loan divided by a property valued at $200,000 equals a 75% LTV loan ratio, and a down payment of 25%. If the lender requires a loan ratio of 80% or under (a 20% down payment), the example shows a favorable LTV. There are different maximum LTV limitations for different loan programs. A down payment risk assessment calculation used by lenders: The mortgage amount divided by the property's assessed value, expressed as a percentage. For example, a $150,000 loan divided by a property valued at $200,000 equals a 75% LTV loan ratio, and a down payment of 25%. If the lender requires a loan ratio of 80% or under (a 20% down payment), the example shows a favorable LTV. There are different maximum LTV limitations for different loan programs.

Lock Rate

See Rate Lock.

Loss Mitigation

A process to avoid foreclosure — usually, when the lender assists a homeowner who has missed a number of payments. Loss mitigation methods include repayment plans, modification of mortgage terms, and bankruptcy.