Late fees - The penalty fees to be paid by the borrower for not making the payment on time.

Late payment - Mortgage payments made after the grace period is over.

Lease-to-own purchase - This is a situation wherein a buyer leases a property, with an option to buy it after a period of time.

Lien - This refers to the lender’s right to take over a borrower’s property in the event of defaults on monthly mortgage payments. Liens can also be placed by HOAs, contractors, utility companies and government agencies.

Loan discount fee - This is the term used to describe points in the Good Faith Estimate Form.

Loan modification - A change in the original loan made by mutual consent of the borrower and lender. Usually results in a change in interest rate and the term (length) of the mortgage. This is negotiated when the borrower is unable to make regular payments. The importance of letting the lender know when you are unable to make payments cannot be understated.

Loan-to-value ratio - The ratio of the home loan to the appraised value of the asset. If this ratio is low, the borrower can get better mortgage terms.

Lock - This is a guarantee given by the lender which states that the mortgage rate quoted will not change for a set amount of time. Borrowers take this to ensure that rate remains the same till the time of loan closing.

Lock commitment letter - A written letter from the lender which states the the amount and interest rate on the loan and are not subject to changes. It is important for a borrower to see this letter when committing to a mortgage.

Lock period - The number of days for which a mortgage lock is applicable. Tthe longer this period the higher the price to the borrower.

Margin - It is the percentage points added by a lender to the index value for determining the interest rate at each adjustment period on an ARM.

Maturity - Same as loan term – the length of the loan.

Maximum loan amount - The maximum amount which can be borrowed for a particular loan type. For example if the loan is an FHA loan, the maximum loan amount is the upper limit set by the FHA on the amount that can be borrowed.

Maximum loan to value ratio - A ratio which expresses the maximum level up to which a loan can be taken against the value of the property for a particular loan program.

Minimum down payment - The minimum allowable level for down payment that is expected from a borrower on a home mortgage.

Monthly debt service - This is the total payments to be made out to debts such as credit cards, installment loans, home equity loans, auto loans, student loans every month.

Mortgage - Commonly, the home loan taken by a borrower to purchase a home.

Technically speaking a mortgage is the transfer of title to real estate which is made to secure the performance of some act such as payment of money by the person making the transfer. Upon the performance of the act, the grantee agrees to convey the property back to the person who has conveyed it to him. The Note conveys the terms of the act – the length of time, the interest rate, payment schedule, conditions of default, etc.

Mortgage broker - An agent who offers services related to taking a home mortgage and is paid a certain fees for such services.

Mortgage insurance - Insurance taken by the borrower, which protects a lender from losses they incur in the event of default on loan payments by the borrower. Mortgage insurance is applicable for loans in which the LTV ratio is more than 80%. It is also required for certain first time home loans irrespective of the LTV percentage.

Mortgage insurance premium - The amount the borrower has to pay on the mortgage insurance either upfront, monthly, annually based on the type of mortgage insurance they have taken up.

Mortgage insurance cancellation - The process of canceling a mortgage insurance policy. It is often done when the equity in the house rises so that the total amount owed is less than 80% of the current value.

Mortgage payment - The loan amount paid every month by a borrower, which includes the contribution towards the principal loan amount, plus the interest.

Mortgage scams - Fraudulent and Deceptive schemes offered by lender or brokers. lenders, sellers and buyers must be aware of them.

Mortgage spam - Emails that offer great mortgage deals often tempting you with rates and terms that are not available.

Negative amortization - In a Negative amortization mortgage the shortfall on interest to be paid every month, is added to the principal loan balance thereby increasing the principal amount owed by the borrower. This increase in principal leads to an increasing amount of interest expense. This loan should only be used in special short term situations.

Negative amortization cap - The maximum level to which negative amortization can happen on an ARM. This is usually expressed in the form of a percentage on the original loan amount.

Negative Homeowners Equity - A situation in which, a home owner has borrowed more using their house as collateral than the actual worth of the property. This happens primarily in a declining market – it puts the lender at risk of having many properties turned back to them in foreclosure. This is why first mortgages are only given at 80% loan to value – the property has to decrease in value by 20% for the lender to lose money.

Negative points - These are point paid by a lender on a loan to the borrower. Such payments help to reduce a borrowers’ settlement cost, which is why they are also referred to as rebates.

No-Cost mortgage - In a no-cost mortgage, the cost of taking a mortgage which is usually seen in the form of appraisal fee, settlement fees and so on is not charged by the lender. In return for this advantage the borrower pays a higher interest rate.

Non-conforming mortgage - These mortgage types do not meet the specifications set by the FHA or VA. Typical examples of such mortgages are jumbo loans. In such mortgage types the interest rates and down payments are higher, and the borrower has to incur prepayment penalties.

Nominal interest rate - An interest rate that is an estimate of the interest rate applicable for mortgages and which is not adjusted by either intra-year compounding, or inflation.

Note - This is a document which states that money has been borrowed and this money is to be repaid by the borrower to the lender. It specifies all the terms and conditions of the loan. The Note together with the Mortgage constitutes the loan agreement.