Glossary of Terms

Credit Glossary

It's hard enough trying to stay on top of your credit let alone learn the industry lingo. We've compiled a glossary of industry terms to help you stay ahead of the curve when dealing with your credit, auto loans, home loans, debt, and savings.

Late charge (or "late fee")

The penalty a borrower must pay when a payment is made a stated number of days after the due date.

Late payment fee

A fee charged when a payment has not been received by the specified due date. A payment credited even one minute after the specified due date and time is considered late.

Lease-purchase

Assists homebuyers (especially low- to moderate-income buyers) in purchasing a home by allowing them to lease a home with an option to buy. The rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment.

Liability amount

Amount for which you are legally obligated to a creditor.

Lien

1. A legal claim against property that must be satisfied when the property is sold.
2. A legal hold or claim of one person on the property of another to secure the payment of a debt or satisfaction of an obligation. The right given by law to satisfy debt. A line must be paid and released.

Liquid

Assets in cash, or readily convertible into cash without significant loss of principal.

Loan

A sum of borrowed money (principal) that is usually repaid with interest.

Loan fraud

Purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.

Loan-to-value (LTV) ratio

A percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as a down payment.

Lock-in

Since interest rates can change frequently, many lenders offer an interest rate lock-in that guarantees a specific interest rate if the loan is closed within a specific time.

Loss mitigation

A process to avoid foreclosure. The lender tries to help a borrower who has been unable to make loan payments and is in danger of defaulting on his or her loan

Calculators