GLOSSARY

This glossary is Alphabetical please choose your letter below.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

 

n

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 principal balance of the loan. The danger of negative amortization is that the home buyer ends up owing more than the original amount of the loan.

 

Negative Amortization Cap
The maximum amount of negative amortization permitted on an ARM, usually expressed as a percentage of the original loan.

 

Negative Points
Points paid by a lender for a loan with a rate above the rate on a zero point loan.

 

Net Effective Income
The borrower's gross income minus federal tax.

 

Non Assumption Clause
A statement in a mortgage contract forbidding the assumption of the mortgage without the prior approval of the lender. Note: The signed obligation to pay a debt, as a mortgage note.

 

Negotiable Rate Mortgage
A loan in which the interest rate is adjusted periodically. see Adjustable Rate Mortgage.

 

No Cost Mortgage
A mortgage on which all settlement costs except per diem interest, escrows, homeowners insurance and transfer taxes are paid by the lender and/or the home seller.

 

Non-Conforming Mortgage
A mortgage that does not meet the purchase requirements of the two Federal agencies, Fannie Mae and Freddie Mac, because it is too large or for other reasons such as poor credit or inadequate documentation.

 

Non-Performing Asset
An asset such as a mortgage that is not currently accruing interest or on which interest is not being paid.

 

Non-Permanent Resident Alien
A non-citizen with a green card employed in the US. As distinct from a permanent resident alien, which lenders do not distinguish from US citizens. Non-permanent resident aliens are subject to somewhat more restrictive qualification requirements than US citizens.

 

No Asset Loan
A documentation requirement where the applicant's assets are not disclosed.

 

No Income Loan
A documentation requirement where the applicant's income is not disclosed.

 

No Ratio Loan
A documentation requirement where the applicant's income is disclosed and verified but not used in qualifying the borrower. The conventional maximum ratios of expense to income are not applied.

 

Note
A document that evidences a debt and a promise to repay. A mortgage loan transaction always includes both a note evidencing the debt, and a mortgage evidencing the lien on the property, usually in two documents.

 

Notional Principal Amount
The hypothetical amount on which interest rate swap payments are based. The notional principal amount in an interest rate swap generally is not paid or received by either party.