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Glossary

Loan Amount

The amount you borrow from a lender to purchase a home.

Loan Estimate (LE)

A new form/disclosure that replaces the current Good Faith Estimate (GFE) and early Truth in Lending (TIL) disclosures that reflects the key features, costs and risk of the mortgage loan for which they are applying. The form must be provided to the consumer three business days after the application date.

Loan Program

A type of loan defined by its term and repayment features. Examples include: 30-year fixed rate mortgage, 10/1 ARM mortgage.

Loan Servicing

The term used to describe the collection and management of your monthly mortgage payment, which includes principal and interest. This typically includes processing payments, sending statements and managing escrow accounts.

Loan-to-Value Ratio (LTV)

A down payment risk assessment calculation used by lenders: The mortgage amount divided by the property's assessed value, expressed as a percentage. For example, a $150,000 loan divided by a property valued at $200,000 equals a 75% LTV loan ratio, and a down payment of 25%. If the lender requires a loan ratio of 80% or under (a 20% down payment), the example shows a favorable LTV. There are different maximum LTV limitations for different loan programs. A down payment risk assessment calculation used by lenders: The mortgage amount divided by the property's assessed value, expressed as a percentage. For example, a $150,000 loan divided by a property valued at $200,000 equals a 75% LTV loan ratio, and a down payment of 25%. If the lender requires a loan ratio of 80% or under (a 20% down payment), the example shows a favorable LTV. There are different maximum LTV limitations for different loan programs. A down payment risk assessment calculation used by lenders: The mortgage amount divided by the property's assessed value, expressed as a percentage. For example, a $150,000 loan divided by a property valued at $200,000 equals a 75% LTV loan ratio, and a down payment of 25%. If the lender requires a loan ratio of 80% or under (a 20% down payment), the example shows a favorable LTV. There are different maximum LTV limitations for different loan programs. A down payment risk assessment calculation used by lenders: The mortgage amount divided by the property's assessed value, expressed as a percentage. For example, a $150,000 loan divided by a property valued at $200,000 equals a 75% LTV loan ratio, and a down payment of 25%. If the lender requires a loan ratio of 80% or under (a 20% down payment), the example shows a favorable LTV. There are different maximum LTV limitations for different loan programs. A down payment risk assessment calculation used by lenders: The mortgage amount divided by the property's assessed value, expressed as a percentage. For example, a $150,000 loan divided by a property valued at $200,000 equals a 75% LTV loan ratio, and a down payment of 25%. If the lender requires a loan ratio of 80% or under (a 20% down payment), the example shows a favorable LTV. There are different maximum LTV limitations for different loan programs. A down payment risk assessment calculation used by lenders: The mortgage amount divided by the property's assessed value, expressed as a percentage. For example, a $150,000 loan divided by a property valued at $200,000 equals a 75% LTV loan ratio, and a down payment of 25%. If the lender requires a loan ratio of 80% or under (a 20% down payment), the example shows a favorable LTV. There are different maximum LTV limitations for different loan programs.

Lock Rate

See Rate Lock.

Loss Mitigation

A process to avoid foreclosure — usually, when the lender assists a homeowner who has missed a number of payments. Loss mitigation methods include repayment plans, modification of mortgage terms, and bankruptcy.

Mail-Away Closing

When you can't be present at the closing table, it may be possible to do a mail-away closing: The closing documents are mailed to you by the closing agent. You sign all necessary documents and mail them back. The closing agent then releases the funds and records the transaction at the county office before mailing the package back to the lender.

Manufactured Housing

Factory-built homes, including prefabricated (also known as modular) and mobile homes.

Monthly Payment

The amount you pay on your mortgage loan on a monthly basis. Normally, a monthly mortgage payment consists of principal, interest, property taxes and homeowners insurance—known as PITI.

Mortgage

A legal document that gives you conditional ownership of your home, and uses the home itself for security (see collateral ) on the loan. The main condition of a mortgage is that you make regular payments of principal and interest until the mortgage debt is fully paid.

Mortgage Application

The process by which you submit personal financial information—including income, assets and debts—to a mortgage lender. The lender verifies and evaluates the information to determine loan approval.

Mortgage Broker

A person or company that takes mortgage applications, performs many loan processing functions (ordering credit reports, appraisals etc.), and offers a borrower loans found from a search of sources—for a fee or commission.

Mortgage Insurance (MI)

A policy that guarantees payment of a mortgage loan in case of default. Paid by the homeowner, mortgage insurance is not required on a conventional loan if your down payment is at least 20 percent.

Mortgage Insurance Premium (MIP)

An amount paid at closing or as a part of your monthly payment for mortgage insurance.