FHA Loan and Mortgage Glossary - Terms Beginning with 'N'
- Negative Amortization: This is when the amount of money that a borrower pays for their monthly mortgage payment does not pay the full amount of interest that is due that month. The extra interest is added to the principal of the loan which makes the principal of the loan increase instead of decrease like a traditional loan. This can take place with interest-only loans and adjustable rate mortgages that have a monthly payment cap, but the interest rate allows for the extra that is left over because of the monthly payment cap to be added on to the principal of the loan.
- Net Effective Income: This is the borrower's annual income after they pay taxes.
- Non-assumption Clause: This part of the terms of a mortgage loan contract that states that the borrower can not allow another person to assume the mortgage loan without the approval of the mortgage lender.
- No Income Verification: Also known as stated income. These are programs offered by mortgage lenders where the borrower does not have to prove or verify their income in order to get a loan. Usually there is a credit score minimum for people seeking no income verification loans.
- Non-conforming Loan: This is also known as a jumbo loan. These types of loans are higher than the limit set by Fannie Mae which means they will not purchase the loan in the secondary market. Because of this the interest rate on the loan is usually higher and the terms are less favorable for the borrower.
- Note: A contract agreement that states that a borrower will pay a lender a specified amount of money by a certain date.