Late fee: That charge made to the debtor on a loan when payment is not received by the lender within the terms stated in the loan agreement.

Late payment: Loan or credit payments that do not reach the lender or creditor on or before the payment due date. The indications of late payments on a credit report are very damaging to an individual’s credit report particularly over the most current past 24 months.

Lease: Regarding cars; a two to five year agreement that provides the Lessee the use of a vehicle during the term of the lease. The lessee is responsible for repairs and maintenance of the vehicle. Regarding real estate, a form of a rental agreement that is at least six months or more in duration. The agreement locks in the payment for the term of the lease.

Lease like loan: A type of auto loan that combines the features of a lease with those of a conventional auto loan. There is usually no down payment required and payments can be as much as 30% lower than conventional car loans. There is a “residual balance” due at the end of the lease which extends the payments on the loan until the residual balance is paid in full. Carefully read the terms of the program to assure that you understand the parameters of this or any type of purchase agreement.

Lease Option: AKA Lease to Own A financing option for a tenant to make an above market rent payment with that dollar amount above the regular market rents going toward the down payments if the option to purchase the property at a later date is exercised. The purchase price and terms are agreed upon at the signing of the lease option. Consult with a real estate agent or attorney prior to entering this kind of agreement as these are usually made between a landlord and tenant who have no formal training in this type of agreement or contract.

Lender: The person or entity providing credit or a loan to a borrower at specific terms and conditions. Also called a creditor.

Liabilities: The dollar amount that a person, company or government owes to all creditors.

Lien: A claim on property for a debt that is owed. A lien may also be placed on a person as the result of a legal action against that person. Liens must usually be paid/satisfied prior to closing of a real estate transaction.

Lien wavier: A document that releases a consumer (homeowner) from any further obligation for payment of a debt once it has been paid in full. Lien waivers typically are used by homeowners who hire a contractor to provide work and materials to prevent any subcontractors or suppliers of materials from filing a lien against the homeowner for nonpayment.

Lifetime Cap: That maximum interest rate that an adjustable rate mortgage can ever increase to during the entire term of the loan. See Adjustable Rate Mortgage for more information.

Line of credit: A preauthorized amount of credit offered to an individual, business or institution that is commonly secured against an asset such as a home (real estate).

Loan: Funds borrowed from a financial institution with a written promise/NOTE to repay the debt under specific terms over a set period of time.

Loan Servicer: The business that collects payments on loans; from real estate loans, to signature loans, and car loans.

Loan to Value: (LTV) The ratio of the property value to the loan amount. A $500,000 sales price with a $400,000 loan is an 80% LTV loan. 80% of $500,000 is $400,000.

Lock or Lock In: A guarantee by the lender on a newly originated home loan that the interest rate is guaranteed for a specific number of days. It is vital that the loan fund prior to the lock expiring to assure the borrower the wanted interest rate. Locks longer than 90 days are usually charged an upfront fee.