L late charge The penalty a borrower must pay when a payment is made a stated number of days (usually 15) after the due date. lease 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. leasehold estate 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. legal description A property description, recognized by law, that is sufficient to locate and identify the property without oral testimony. liabilities A person's financial obligations. Liabilities include long-term and short-term debt, as well as any other amounts that are owed to others. liability insurance 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. lien 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. liquid asset A cash asset or an asset that is easily converted into cash. loan A sum of borrowed money (principal) that is generally repaid with interest. loan commitment See commitment letter. loan origination 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 80 percent. lock-in 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 closing. lock-in period The time period during which the lender has guaranteed an interest rate to a borrower. See lock-in.