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Term Definition
Needs-Based Pricing
A seller bases his or her asking price on factors such as the required funds to pay off the mortgage, purchase of another house, remodeling costs, etc.

Negative Amortization
Under some adjustable rate mortgages, the interest rate may increase or decrease independently of a required minimum payment. If a borrower makes the minimum payment, it may not cover the entire amount of the interest usually due at the current interest rate. The borrower defers the interest payment. The deferred interest is then added to the balance of the loan, increasing rather than decreasing the loan balance. This is known as negative amortization.

Negotiation
The bargaining process that occurs before an agreement is reached.

Net Cash Flow
Income from an investment property after subtracting expenses such as principal, interest, taxes and insurance.

Net Operating Income (NOI)
The gross income of an income-producing property minus the total of all expenses except for debt service. Subtracting the total of all debt service payments from the net operating income yields the cash flow.

Net Present Value of Investment
Initial Capital Investment subtracted from the PV of Investment. If the NPV is positive, your Required Rate of Return will be achieved.

Net Present Value of Property
Purchase Price of Property subtracted from the PV of Property. If the NPV is positive, your Required Rate of Return will be achieved.

No Cash-Out Refinance
A new mortgage in which the amount covers the remaining balance of the first loan, closing costs, any outstanding liens, and cash of up to one percent of the new mortgage’s principal.

No Income Verification Loan (NIV)
A type of loan generally limited to self-employed individuals. The loan is underwritten based on the borrower's written representation of their annual income as stated on their loan application. No income verification such as tax returns, operating statements, etc. are required. Debt ratios are calculated using the stated income. These programs allow owners of small businesses to use their actual cash flows, rather than the net incomes normally reported in tax filings. Higher interest rates on these products serve to compensate lenders for their higher risks. (See definition of "debt ratio" above.)

Non-Assumption Clause
A provision in a loan prohibiting a mortgage’s transfer to another borrower without lender approval.

Non-conforming Loan
A loan that does not meet the underwriting requirements of Fannie Mae and Freddie Mac. The majority of loans fall into this category.

Non-Qualifying Loan
A loan in which the buyer is not obligated to qualify under traditional bank financing requirements.

Non-Recurring Closing Costs
One-time closing fees for appraisal, credit report, loan points, title insurance, home inspection, and so on.

Note
A written promise by a borrower to repay a specified amount of money on certain terms.

Note Broker
An individual acting as an intermediary between the holder of an existing note and that note’s prospective buyer.

Notice of Default
The initial action that a lender takes when a mortgage payment is late and any attempts to reconcile the issue out of court have not been successful.

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