Mortgage Glossary J-N

February 4, 2009
Matt Isleib

 

Jumbo mortgage- A mortgage where the loan amount is higher than that of the present conforming loan limit which is set by both Fannie Mae and Freddie Mac. The limits are 417,000 for a single family home, 533,850 for two family home, 645,300 for a three family home and 801,950 for a four family home.

Late charge- A fee imposed on a borrower for not paying on time

Lease- A written agreement in which the property owner allows a tenant to use property in exchange for rent, and for a specified period. Or, a written agreement in which a car dealer allows a consumer to use a vehicle in exchange for payments for a specified period

Leasehold estate- A tenant’s right to use a property for a fixed period

Legal description- A way of identifying a piece of property in writing that is acceptable to a court

Liabilities- What you owe to creditors. For example your credit cards are a liability. It is the loans that you have outstanding that are considered your liabilities

LIBOR rate- LIBOR stands for London Interbank Offered Rate. It’s the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London. It is a standard financial index used in U.S. capital markets and can be found in the Wall Street Journal. In general, its changes have been smaller than changes in the prime rate. It’s an index that is used to set the cost of various variable-rate loans, including credit cards and adjustable-rate mortgages

Lien- A legal claim against property for payment of a debt or for services rendered. One who holds a lien has the right to sell the property to obtain the money, or to recover the money when the property is sold

Life cap- The highest rate that your loan could adjust to over the life of the loan

Line of credit- An approved amount given to a borrower. It is usually referred to as home equity lines of credit or HELOC’s

Lis pendens- A pending lawsuit; in real estate, the constructive notice filed in public records that a legal dispute exists over a piece of property. It is typically filed once a property has gone into foreclosure. It also freezes the property’s title

 Listing- The public offering of your home for sale

Loan application- A document in which a prospective borrower details his or her financial situation to qualify for a loan

Loan application fee- A fee charged upfront by some lenders to process a loan application

Loan Classroom- A web site that teaches and informs on the mortgage market, real estate market, financial market, the mortgage process and has great blogs by matt isleib

Loan commitment- A lender’s promise to lend funds for a loan

 Loan origination fee- A charge levied by a lender for underwriting a loan. The fee often is expressed in points. A point is 1 percent of the loan amount

Loan processing fee- A charge levied by a lender for accepting a loan application and gathering the supporting paperwork

Loan term- The time frame of your loan. For example a 30 or 15 year term

LTV- Loan to value ratio. The outstanding amount you owe divided by the current value of your home. For example you owe 200,000 and your home is worth 300,000, your ltv would be 66%

Lock - A lender guarantees delivery of a said rate for a specific period of time

Locked and Floated- A lender guarantees delivery of a said rate for a specific period of time and during that time if rates improve they will get a better interest rate

Market conditions- Factors that affect the sales of homes in an area, such as interest rates, the unemployment rate, home appreciation, weather and time of year

Market value- The price at which a given property or product sells between a willing, unpressured buyer and seller who know all the pertinent facts about the property or product

 Median price- In a given area, the amount paid for a house in which half of the houses in that area sell for less and half sell for more.

 Minimum payment- The least possible amount that you are required to pay

MLS- A shared compilation of detailed information on properties for sale in a certain area. This allows agents to show and sell listings held by offices other than the one they’re associated with. The MLS is usually available only to Realtors

Modification- A change to the original terms of the loan agreement. Typically if a borrower runs into financial difficulty they can attempt to work out a loan modification with the lender

Mortgage- A legal agreement that uses property as collateral to secure payment of a debt. The legal agreement means that when a mortgage is on a house, the lender can take possession of the house if the borrower stops making payments

Mortgage banker- One who originates home loans, sells them to investors, services monthly payments and handles escrow. Some mortgage bankers sell their loans on the secondary market

Mortgage broker- One who finds lenders for prospective borrowers who meet the lenders’ criteria. A mortgage broker does not make the loan, but receives payment for services

Mortgage insurance- Also known as MI or PMI (for private mortgage insurance). A policy that protects the lender by paying the costs of foreclosing on a house if the borrower stops paying the loan. Although mortgage insurance protects the lender, it is paid monthly by the borrower. Mortgage insurance usually is required if the down payment is less than 20 percent of the sale price

Mortgagee- One who lends for the purchase of property, using the property as collateral to assure payment

 Multifamily property- Either a two, three or four family property 

 Negative amortization- A gradual increase in mortgage debt that happens when the monthly payment does not cover the entire principal and interest due. The shortfall is added to the remaining balance to create “negative” amortization

 No cash out refinance- A refinance where either the monthly paymnet is lowered or the term reduced.

Non assumption clause- A provision of a home loan that prohibits the transfer of the mortgage to another borrower without the lender’s permission

Non recurring closing costs- One-time fees paid at a real-estate settlement, including origination, appraisal, points, title insurance and credit report

Nonrecourse loan- A loan that is secured by collateral, such as real estate, for which the borrower is not personally liable

Note- A promise to pay a debt

Note rate- The interest rate at which you repay your promised debt

Notice of default- A step in the foreclosure process in which the lender formally tells a court that the borrower is in arrears