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| • | Negative Amortization - Occurs when your monthly payments are not large enough to pay all the interest due on the loan. This unpaid interest is added to the unpaid balance of the loan. The danger of negative amortization is that the buyer ends up owing more than the original amount of the loan. |
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| • | Net Cash Flow - The income that remains for an investment property after the monthly operating income is reduced by the monthly housing expense, which includes principal, interest, taxes, and insurance (PITI) for the mortgage, homeowners' association dues, leasehold payments, and subordinate financing payments. |
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| • | Net Effective Income. - The borrower's gross income minus federal income tax. |
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| • | Net Worth - The value of all assets, including cash, less total liabilities. |
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| • | No Cash-out Refinance - A refinance transaction in which the new mortgage amount is limited to the sum of the remaining balance of the existing first mortgage, closing costs (including prepaid items), points, the amount required to satisfy any mortgage liens that are more than one year old (if the borrower chooses to satisfy them), and other funds for the borrower's use (as long as the amount does not exceed 1 percent of the principal amount of the new mortgage). |
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| • | No-Doc Mortgage - A no-documentation or "no-doc" mortgage is a loan offered by certain lenders to borrowers who generally have at least 25% equity in their home, or who can make a down payment of 5 - 30%. Loans requiring lower down payments (5 - 24%) are available to borrowers with excellent credit. Generally a good choice for the self-employed, no-doc mortgages are also suitable for those who do not wish to verify their income or who have credit issues (such as a brief, blemished, or missing credit history). Benefits of the no-doc mortgage include a shorter application process, as borrowers are not required to provide income, employment, or asset documentation and the lender has less paperwork to handle. Keep in mind that no-doc mortgages generally carry a slightly higher interest rate and may be available only from select lenders. |
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| • | Non-Assumption Clause - A statement in a mortgage contract forbidding the assumption of the mortgage without the prior approval of the lender. |
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| • | Non-Conforming Loan - A conventional home mortgage that does not meet the criteria of Fannie Mae or Freddie Mac for various reasons including loan amount, loan characteristics or underwriting guidelines. Non-Conforming loans usually incur a higher rate and/or points. |
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| • | Non-liquid Asset - An asset that cannot easily be converted into cash. |
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| • | Note - A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time. |
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| • | Note Rate - The interest rate stated on a mortgage note. |
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| • | Notice of Default - A formal written notice to a borrower that a default has occurred and that legal action may be taken. |
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