Glossary of Terms
Mortgage. Real Estate & Insurance
- NEGATIVE AMORTIZATION
- Amortization means that monthly payments are large enough to pay the interest and reduce the principal on a mortgage loan by its maturity date. Negative amortization occurs when the monthly payments do not cover all of the interest cost. The interest cost that isn't covered is added to the unpaid principal balance. This means even after making many payments, a borrower may owe more than was owed at the beginning of the loan.
- Negative Cash Flow
- Situation in which expenditures required to maintained an investment exceed income received on the property.
- Net Worth
- Net Worth is one's assets, less one's liabilities. Liquid net worth (that which is cash or can be immediately converted to cash) is what cooperatives focus on. Value of all of a company's (or individual's) assets, including cash, less its total liabilities. It is used to indicate financial strength.
- Non-Conforming Use
- Permitted use of real property, even though it does not conform to current zoning laws, because it was lawfully established and maintained before the current zoning laws were in effect.
- Non-Realty Items
- Depending on where the property is located, items such as washers, dryers, dishwashers, disposals, stoves, carpeting, draperies, window air conditioners, etc., that are included in the sale. Non-realty items that are given value on the appraisal are usually considered sales concessions.
- Note Rate
- Starting interest rate for an Adjustable Rate Mortgage (ARM) loan or variable-rate home equity line of credit. At the end of the effective period for the start rate, the interest rate adjusts periodically during the life of the loan based on a specified financial index.
- NOTICE OF RIGHT TO CANCEL
- Under Regulation Z, customers must be notified they are entering into a transaction that will result in a lien against their primary residence. This document explains they have the right to cancel the transaction, at no cost, within 3 business days from the date of signing the closing documents on a loan.