Real Estate Definitions - N


negative amortization
Some adjustable rate mortgages allow the interest rate to fluctuate independently of a required minimum payment. If a borrower makes the minimum payment it may not cover all of the interest that would normally be due at the current interest rate. In essence, the borrower is deferring the interest payment, which is why this is called "deferred interest." The deferred interest is added to the balance of the loan and the loan balance grows larger instead of smaller, which is called negative amortization.
Negotiable Instrument:
A written instrument which may be transferred or assigned by endorsement and delivery so that the legal right to receive its value are transferred. They usually represent a promise to pay as in a check, shares of stock, or a promissory note.
Net Lease:
A lease where the tenant pays building operating expenses and a small rent check to the landlord. To the landlord, the rent received represents Net Income; he does not have to pay certain expenses out of his rental income because the tenant paid them for him.
Net Listing:
A Listing Agreement where the Broker receives any mount that is paid for the property over a stipulated amount that the seller insists on Netting or clearing from the sale. The seller is saying, "Add your commission on top of my minimum price."
Net Operating Income:
(NOI) Gross Income less certain Expenses. The amount left over after expenses are deducted. This is an appraisal term, used in the calculation of the capitalization (income) approach. (F-4)
Net-Net Lease:
A lease where the tenant pays all building operating expenses and the landlord's mortgage payment on the property plus pays a small rental amount to the landlord. To the landlord, the small rental amount is true net income because he has no expenses to pay.
no cash-out refinance
A refinance transaction which is not intended to put cash in the hand of the borrower. Instead, the new balance is caculated to cover the balance due on the current loan and any costs associated with obtaining the new mortgage. Often referred to as a "rate and term refinance."
no-cost loan
Many lenders offer loans that you can obtain at "no cost." You should inquire whether this means there are no "lender" costs associated with the loan, or if it also covers the other costs you would normally have in a purchase or refinance transactions, such as title insurance, escrow fees, settlement fees, appraisal, recording fees, notary fees, and others. These are fees and costs which may be associated with buying a home or obtaining a loan, but not charged directly by the lender. Keep in mind that, like a "no-point" loan, the interest rate will be higher than if you obtain a loan that has costs associated with it.
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.
no-points loan
Almost all lenders offer loans at "no points." You will find the interest rate on a "no points" loan is approximately a quarter percent higher than on a loan where you pay one point.
notice of default
A formal written notice to a borrower that a default has occurred and that legal action may be taken.