Mortgage Glossary - L

Definitions of Mortgage Terms

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Letter of Intent Lifetime rate Cap Line of Credit Loan Commitment Loan Origination Loan to Value ratio Low Documentation Loan Low Down Mortgages Low down payment loan

 

• Letter of Intent - A formal notification that a buyer intends to buy property. It is not legally enforceable.
• 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 mortgage.
• Line of Credit- A commitment by a financial institution to lend up to a specified maximum amount to a customer during a specified period of time.
• Loan Commitment - A lender's promise to advance a specific sum on specific terms.
• Loan Origination - The process by which a mortgage lender obtains a mortgage secured by real property. An origination fee is charged by the lender to process all the forms involved in obtaining a mortgage.
• Loan to Value ratio - The percentage relationship between the amount of the loan and the appraised value or sales price (whichever is lower).
• Low Documentation Loan - A mortgage that requires less verification of income or assets (or both) than a conventional loan. Low-documentation loans are designed for the entrepreneur or self-employed, for recent immigrants with money in foreign countries or for borrowers who cannot or choose not to reveal information about their incomes. You need a substantial down payment, excellent credit history and will usually pay a higher interest rate.
• Low Down Mortgages - Mortgages with a low down payment, usually less than 10 percent. Fannie Mae and Freddie Mac design loan programs that spell out a set of standards for lenders. In recent years these government-chartered agencies have made low-down mortgages more available
• Low Down Payment Mortgage - A mortgage or loan in which the buyer puts down a small down payment and borrows a very high percentage of the purchase price.