Mortgage and Real Estate Terms – N

NEGATIVE AMORTIZED (NEG/AM) – the unpaid interest which is added to the mortgage principal in a loan where the principal balance increases rather than decreases, because the monthly mortgage payments do not cover the full amount of the interest that’s due. Option ARM mortgages have become a very popular mortgage product in recent years which can lead to Neg Am.

NEG AM LOANS – a popular type of an Adjustable Rate Mortgages (ARM) loan, where the initial interest rate (start-rate) is very low, therefore monthly payments are smaller than other type loans. These type loans have interest rates which adjust periodically, and monthly payments which also change. There normally is a CAP, or ceiling, which limits the amount the interest rate can go up (fully indexed), AND also a separate limit on the size the monthly payments can increase as well. Could be a decent fit for people with strong income ‘potential’, bigger home now for less money monthly. These loans do carry a higher level of risk. Be sure to speak with an Loan Advisor for details.

NEGATIVE CASH FLOW – the deficit that is created when expenditures required to maintain an investment exceed income received on the property.

NET WORTH – the value of all assets including cash less total liabilities. Often used as an underwriting guideline to indicate creditworthiness and financial strength.

NO CASH-OUT REFINANCE (RATE & TERM RE-FI) – transaction in which the mortgage amount is limited to the sum of the unpaid principal balance of any existing mortgages plus closing costs. Check out our Mortgage Refinance Section for program options.

NON-CONFORMING MORTGAGE LOAN – a residential mortgage loan in which the loan amount, the loan-to-value ratio, the term, the credit score, or some other aspect (or combination of characteristics) of the loan exceeds permissible limits as specified in (GSE) agency regulations. Rates & fees are typically higher than ‘conforming’ rates. These programs may include bad credit mortgage financing options and stated income mortgage and no doc loan programs for self-employed or commissioned individuals.

NOTE – a general term for any kind of paper or document signed by a borrower that is an acknowledgment of the debt and is, by inference, a promise to pay. When the note is secured by a mortgage, it is called a mortgage note, and the mortgagee is named as the payee.

NOTICE OF COMPLETION – notice recorded after completion of construction. Mechanic’s liens must be filed within a specific period of time thereafter.

NOTICE OF DEFAULT – notice recorded after a default under a deed of trust or mortgage has occurred. Also, the notification sent to defaulting borrowers required by insurers or guarantors – such as FHA, VA, or certain mortgage insurance companies.