negative amortization
A gradual increase in mortgage debt that occurs when the monthly
payment is not large enough to cover the entire principal and interest
due. The amount of the shortfall is added to the remaining balance to
create "negative" amortization.
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.
net worth
The value of all of a person's assets, including cash, minus all
liabilities.
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).
nonliquid asset
An asset that cannot easily be converted into cash.
note
A legal document that obligates a borrower to repay a mortgage loan at
a stated interest rate during a specified period of time.
note rate
The interest rate stated on a mortgage note.
notice of default
A formal written notice to a borrower that a default has occurred and
that legal action may be taken.
