Debt Consolidation Glossary of Terms

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Glossary - L

LIBOR Rate
LIBOR stands for London Inter Bank Offer Rate. It's the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London. It is a standard financial index used in U.S. capital markets and can be found in the Wall Street Journal. In general, its changes have been smaller than changes in the prime rate. It's an index that is used to set the cost of various variable-rate loans, including credit cards and adjustable-rate mortgages.

lien
A legal hold or claim from one person on the property of another. The lien placed by a first mortgage is special; it is called the first lien and takes precedence over others.

lenders fees
Lender and broker fees charged on the loan. These fees may vary from lender to lender. Fees such as underwriting, processing, administrative, lock, commitment, courier, etc., are included. Other closing costs such as title search/exam/insurance; prepaid insurance, taxes, interest; doc stamps, etc., are not included.

lifetime cap
In an adjustable rate mortgage (ARM), it limits the amount that the interest rate can increase or decrease over the life of the loan.

loan to value ratio (LTV)
The percentage of the home's price that is paid for by a mortgage. On a $100,000 house, if the buyer makes a $20,000 down payment and borrows $80,000, the mortgage is 80 percent of the price of the house. Therefore, the loan-to-value ratio is 80. When refinancing a mortgage, the loan-to-value ratio is computed using the appraised value of the home, not the sale price.

lock period
A lender's guarantee that the mortgage rate quoted will not change for a specific period. The borrower wants the lock to stay in effect until closing.

lock-in
A lender's guarantee that the mortgage rate quoted will not change for a specific period. The borrower wants the lock to stay in effect until closing.