Philippine Real Estate Glossary

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Laches
Delay or negligence in asserting one's legal rights.

Land Contract
A contract ordinarily used in connection with the sale of property in cases where the seller does not wish to convey title until all or a certain part of the purchase price it paid by the buyer; often used when property is sold on a small downpayment.

Land, Hereditament, Tenement
A phrase used in the early English law to express all sorts of property of the immovable class. Its present use may be said to express real estate with all fixed improvement thereon, if any.

Late Charge
The penalty a borrower must pay when a payment is made a stated number of days after the due date.

Lease
A written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may possess the real estate for a specified period of time and rent.

Lease-purchase Mortgage Loan
An alternative financing option that allows low- and moderate-income home buyers to lease a home from a nonprofit organization with an option to buy. Each month's rent payment consists of principal, interest, taxes and insurance (PITI) payments on the first mortgage plus an extra amount that is earmarked for deposit to a savings account in which money for a downpayment will accumulate. Nonprofit organizations may use the lease-purchase option to purchase a home that they then rent to a consumer, or "leaseholder." The leaseholder has the option to buy the home after a designated period of time (usually three or five years). Part of each rent payment is put aside toward savings for the purpose of accumulating the down payment and closing costs.

Lease-purchase Option
Nonprofit organizations may use the lease-purchase option to purchase a home that they then rent to a consumer, or "leaseholder." The leaseholder has the option to buy the home after a designated period of time (usually three or five years). Part of each rent payment is put aside toward savings for the purpose of accumulating the down payment and closing costs.

Leasehold Estate
A way of holding title to a property wherein the mortgagor does not actually own the property but rather has a recorded long-term lease on it.

Legal Description
A property description, recognized by law, that is sufficient to locate and identify the property without oral testimony.

Lessee
One who contract to rent property under a lease contract.

Lessor
An owner who enters into a lease with a tenant.

Leverage
Making an investment with only partial amount of the total amount of the investment. Also called "On Margin". Loan interest rates vary greatly depending on the amount being leveraged or margined, and the investment instrument.

Liabilities
A person's financial obligations. Liabilities include long-term and short-term debt, as well as any other amounts that are owed to others.

Liability Insurance
Insurance coverage that offers protection against claims alleging that a property owner's negligence or inappropriate action resulted in bodily injury or property damage to another party.

Lien
A legal claim against a property that must be paid off when the property is sold.

Lifetime Payment Cap
For an adjustable-rate mortgage (ARM), a limit on the amount that payments can increase or decrease over the life of the mortgage.

Lifetime Rate Cap
For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the life of the loan.

Line of Credit
An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time to a specified borrower. See home equity line of credit.

Liquid Asset
A cash asset or an asset that is easily converted into cash.

Loan
A sum of borrowed money (principal) that is generally repaid with interest.

Loan Application
The loan application is a detailed form designed to provide information from you that your lender will need. Lenders use the application to evaluate whether or not they can give you a loan, and if so, the amount of money they can lend you. The "four Cs" of credit come into play when filling out an application -- they are capacity, credit history, capital and collateral. The loan application form requests information such as: -- bank account balances and account numbers, as well as bank branch address;-- information about where you work or what sources of income you have;-- outstanding debts (including loans and credit cards with names and addresses of creditors).Information needed for the loan application may vary from lender to lender, so prior to filling out the application it's important to discuss with your lender what items your lender will need. If your an approved lender uses Desktop Underwriter, an automated underwriting system, they will not have to ask you for as much information regarding your employment, credit, or residence history. As a result, you won't need to provide as much documentation to back-up the information. Ask your lender if the lender uses this time-saving system.

Loan Commitment
The commitment letter states the dollar amount of the loan being offered, the number of years you have to repay the loan, the loan origination fee, the points, the annual percentage rate, and the monthly charges. The letter also states the time you have to accept the loan offer and to close the loan. Make sure you understand all aspects of the commitment letter because by signing it, you indicate your acceptance of its terms and conditions.

Loan Origination
The commitment letter states the dollar amount of the loan being offered, the number of years you have to repay the loan, the loan origination fee, the points, the annual percentage rate, and the monthly charges. The letter also states the time you have to accept the loan offer and to close the loan. Make sure you understand all aspects of the commitment letter because by signing it, you indicate your acceptance of its terms and conditions.

Loan Origination Fee
The loan origination fee covers the administrative costs of processing the loan. It is often expressed in points. One point is 1 percent of the mortgage amount.

Loan Terms and Conditions
With a reverse mortgage, a lender can call in your loan under certain conditions. But, if you occupy the property as your primary residence, are not absent from the property for 12 consecutive months. You may instruct the lender to pay the taxes and insurance on your behalf from your reverse mortgage funds. The lender will set aside funds from your reverse mortgage to pay for future taxes and insurance, as long as funds are available. Furthermore, as long as you comply with the terms noted above, you can't be forced to sell your home to pay off the reverse mortgage, even if the loan balance grows to exceed the value of your property.

Loan-To-Value (LTV) Percentage
The relationship between the principal balance of the mortgage and the appraised value (or sales price if it is lower) of the property.

Lock-in
A written agreement in which the lender guarantees a specified interest rate if a mortgage goes to closing within a set period of time. The lock-in also usually specifies the number of points to be paid at closing.

Lock-in Period
The time period during which the lender has guaranteed an interest rate to a borrower.