Glossary 11

Loan Origination: The process by which

have earned income from their trade or

business. Contributions to the Keogh

a loan is made, which may include tak-

plan are tax-deductible.

ing a loan application, processing and

underwriting the application, and clos-

ing the loan.

L

Loan Origination Fees: Fees paid to

your mortgage lender or broker for pro-

Late Charge: A penalty imposed by the

cessing the mortgage application. This

lender when a borrower fails to make a

fee is usually in the form of points. One

scheduled payment on time.

point equals one percent of the mortgage

amount.

Lease-Purchase Option: An option

sometimes used by sellers to rent a

Loan-To-Value (LTV) Ratio: The re-

property to a consumer, who has the op-

lationship between the loan amount

tion to buy the home within a specified

and the value of the property (the lower

period of time. Typically, part of each

of appraised value or sales price), ex-

rental payment is put aside for the pur-

pressed as a percentage of the property's

pose of accumulating funds to pay the

value. For example, a $100,000 home

down payment and closing costs.

with an $80,000 mortgage has an LTV of

80 percent.

Liabilities: A person's debts and other

financial obligations.

Lock-In Rate: A written agreement

guaranteeing a specific mortgage inter-

Liability Insurance: Insurance coverage

est rate for a certain amount of time.

that protects property owners against

claims of negligence, personal injury or

Low-Down-Payment Feature: A feature

property damage to another party.

of some mortgages, usually fixed-rate

mortgages, that helps you buy a home

LIBOR-Index: An index used to deter-

with a low down payment.

mine interest rate changes for certain

adjustable-rate mortgage (ARM) plans,

based on the average interest rate at

M

which international banks lend to or

borrow funds from the London Inter-

Manufactured Housing: Homes that

bank Market.

are built entirely in a factory in accor-

Lien: A claim or charge on property for

dance with a federal building code ad-

payment of a debt. With a mortgage,

ministered by the U.S. Department of

the lender has the right to take the title

Housing and Urban Development (HUD).

to your property if you don't make the

Manufactured homes may be single-

mortgage payments.

or multi-section and are transported

from the factory to a site and installed.

Lifetime Cap: For an adjustable-rate

Homes that are permanently affixed to

mortgage (ARM), a limit on the amount

a foundation often may be classified as

that the interest rate or monthly pay-

real property under applicable state law,

ment can increase or decrease over the

and may be financed with a mortgage.

life of the loan.

Homes that are not permanently affixed

to a foundation generally are classified

Liquid Asset: A cash asset or an asset

as personal property, and are financed

that is easily converted into cash.

with a retail installment sales agree-

ment.