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Glossary of Mortgage and Home Equity Terms

To navigate through our glossary, click on the first letter of the word you’re looking for.
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Land Acquisition Loan
A loan made for the purpose of purchasing land only, not improvements on or to the land.
Late Charge
The penalty a borrower must pay when a payment is made after its due date or courtesy period.
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).
Liability Coverage
Insurance designed to protect against expenses incurred due to bodily injury or property damage resulting from acts of, or neglect by, the insured.
A legal claim or attachment against property as security for payment of an obligation.
Lifetime Cap
A provision of an ARM that limits the total increase in interest rates over the life of the loan.
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.)
The ability to readily convert assets or investments to cash.
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- to-Value (LTV)
The ratio of the amount of a potential mortgage to the value of the property it is intended to finance, expressed as a percentage.
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.
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