The penalty a borrower must pay when a payment is made a stated number
of days (usually 15) after the due date.
A written agreement between the property owner and a tenant that
stipulates the conditions under which the tenant may possess the real
estate for a specified period of time and rent.
A way of holding title to a property wherein the mortgagor does not
actually own the property but rather has a recorded long-term lease on it.
lease-purchase mortgage loan
An alternative financing option that allows low- and moderate-income
home buyers to lease a home from a nonprofit organization with an option
to buy. Each month's rent payment consists of principal, interest, taxes
and insurance (PITI) payments on the first mortgage plus an extra amount
that is earmarked for deposit to a savings account in which money for a
downpayment will accumulate.
A property description, recognized by law, that is sufficient to
locate and identify the property without oral testimony.
A person's financial obligations. Liabilities include long-term and
short-term debt, as well as any other amounts that are owed to others.
Insurance coverage that offers protection against claims alleging that
a property owner's negligence or inappropriate action resulted in bodily
injury or property damage to another party.
A legal claim against a property that must be paid off when the
property is sold.
lifetime payment cap
For an adjustable-rate mortgage (ARM), a limit on the amount that
payments can increase or decrease over the life of the mortgage. See cap.
lifetime rate cap
For an adjustable-rate mortgage (ARM), a limit on the amount that the
interest rate can increase or decrease over the life of the loan. See cap,
interest rate ceiling and interest rate floor.
line of credit
An agreement by a commercial bank or other financial institution to
extend credit up to a certain amount for a certain time to a specified
borrower. See home equity line of credit.
A cash asset or an asset that is easily converted into cash.
A sum of borrowed money (principal) that is generally repaid with
See commitment letter.
The process by which a mortgage lender brings into existence a
mortgage secured by real property.
loan-to-value (LTV) percentage
The relationship between the principal balance of the mortgage and the
appraised value (or sales price if it is lower) of the property. For
example, a $100,000 home with an $80,000 mortgage has a LTV percentage of
A written agreement in which the lender guarantees a specified
interest rate if a mortgage goes to closing within a set period of time.
The lock-in also usually specifies the number of points to be paid at
The time period during which the lender has guaranteed an interest
rate to a borrower. See lock-in.