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Terminology
Here Are Some Helpful Terms Used Throughout The Real Estate,
Mortgage, and Title Processes.
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Lender Fees |
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Lender Fees are fees paid to the lender. |
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Lender Paid Mortgage insurance (LPMI) |
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An alternative to PMI. The lender will increase the interest rate instead of charging PMI on loans with LTV's greater than 80%. Read about different PMI options.
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Lender Processing Fee |
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The lender processing fee covers the cost of analyzing your loan application and compiling and packaging the necessary supporting documentation to close your loan. |
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Lien |
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A claim by one person on the property of another as security for money owed. Such claims may include obligations not met or satisfied, judgments, unpaid taxes, materials, or labor. See also Special Lien. |
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Loan-to-Value Ratio (LTV) |
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The relationship between the amount of the mortgage loan and the value of the real property expressed as a percentage. For purchase loans the value of the property is the appraised value or the purchase price, whichever is less. For refinance loans the value is the appraised value on seasoned properties (owned more than one year).
A LTV of 90% means that you are borrowing 90% of the property value. If a LTV exceeds 80%, Private Mortgage Insurance (PMI) -- that insures the lender in the event a borrower defaults -- is generally required.
Downpayment is the difference between the purchase price and the mortgage amount. |
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Loan-to-Value Ratio (LTV) |
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The relationship between the amount of the mortgage loan and the value of the real property expressed as a percentage. For purchase loans the value of the property is the appraised value or the purchase price, whichever is less. For refinance loans the value is the appraised value on seasoned properties (owned more than one year). |
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Lock |
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A lender's promise to hold a certain interest rate and points for you, for a given number of days, while your loan application is processed. If not locked, the interest rates quoted to you may stay the same, decrease, or increase from the day you apply for your mortgage. Lock-ins on rates remove the risk of rising rates.
However, a locked-in rate could also prevent you from taking advantage of rate decreases. If you think that rates will remain level or even go down, you may choose to bet on interest rates decreasing by electing to float until you go to closing. It is a gamble.
Lock-ins of 30-60 days are common. If your lock-in period expires before you go to closing, you might lose the interest rate and the number of points you had locked-in. You may ask lender for a longer lock-in period. But bear in mind that lenders may charge you a fee for extending the lock-in period. Request information from the lender regarding lock procedures. |
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