Mortgage glossary: Letter L

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Mortgage glossary: Letter L

Land Contract An arrangement where the buyer makes monthly payments to the seller but the ownership of the property does not change hands until the loan is paid in full.

Land-to-Value An appraisal term that calculates the value of the land as a percentage of the total value of the home. If the land exceeds the value of the home it's more difficult to find financing without good comparable sales. Also called lot-to-value.

Lease-Purchase Agreement Also known as rent-to-own. An option whereby a buyer leases a home until the buyer has saved up enough money for a down payment to qualify for a conventional mortgage.

Lender Policy Title insurance that protects a mortgage from defects or previous claims of ownership.

Liability An obligation or bill on the part of the borrower. It works like an automobile loan. When you pay off the car, you get the title. Liabilities such as student loans or a car payment can show up on a credit report, but they can also be anything else that you are obligated to pay. Those liabilities on the credit report are used to determine debt ratios.

LIBOR Index See London Interbank Offered Rate.

Lien A legal claim or prior interest on the property you're about to buy. Borrowing money from another source in order to buy a house could mean that someone else has a lien on that property.

Loan Money granted to one party with the expectation of it being repaid.

Loan Officer The person typically responsible for helping mortgage applicants get qualified and assisting in loan selection and loan application. Loan officers can work at banks, credit unions, and mortgage brokerage houses or for bankers.

Loan Processor The person who gathers the required documentation for a loan application for loan submission. Along with your loan officer, you'll work with the loan processor quite a bit during your mortgage process.

Loan Underwriter The person responsible for ultimately saying ''yes'' or ''no'' on a loan file. The underwriter compares loan guidelines with what you have documented in the file.

Loan-to-Value (LTV) Ratio LTV is expressed as a percentage of the loan amount when compared to the valuation of the home determined by an appraisal. If a home were appraised at $100,000 and the loan amount were $70,000, then the LTV would be 70 percent.

Lock An agreement guaranteeing an interest rate over a predetermined period of time. Loan locks are not loan approvals; they're simply the rate your lender has agreed to give you at loan closing.

London Interbank Offered Rate LIBOR is a British index similar to our Federal Funds rate, where British banks borrow money from one another over short periods to adhere to reserve requirements.

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