Real Estate Glossary

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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.