Initial interest rate: The interest rate that is fixed for a specified number of months at the beginning of the life of a mortgage. On an adjustable rate mortgage (ARM), the initial rate is sometimes referred to as a "teaser" rate because it is below the fully indexed interest rate.

Interest Rate Cap: A provision of an adjustable rate mortgage limiting how much interest rates may increase per adjustment period or over the life of the mortgage loan.

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

Loan amount: The amount the borrower promises to repay, as set forth in the mortgage contract. It differs from the amount of cash disbursed by the amount of points and other credit charges.

Loan-to-value ratio: The loan amount divided by the lesser of the selling price or the appraised value. Also referred to as LTV.

Loan Servicing: All responsibilities and tasks a lender performs to protect the mortgage investment including collecting monthly payments, managing escrow accounts, monitoring and dealing with delinquencies and overseeing foreclosures. (Also referred to as loan administration).

Lock: An option exercised by the borrower, at the time of the loan application, or later, to "lock in" the rates and points prevailing in the market at that time. The lender and the borrower are committed to those terms, regardless of what happens between that point and the closing date.

Lock period: The number of days for which any "lock" or "cap" holds.