Needs-Based Pricing – A seller bases his or her asking price on factors such as the required funds to pay off the mortgage, purchase of another house, remodeling costs, etc.

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.

Negotiation – The bargaining process that occurs before an agreement is reached.

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 Operating Income (NOI) – The gross income of an income-producing property minus the total of all expenses except for debt service. Subtracting the total of all debt service payments from the net operating income yields the cash flow.

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).

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.

No Income Verification Loan (NIV) – A type of loan generally limited to self-employed individuals. The loan is underwritten based on the borrower’s written representation of their annual income as stated on their loan application. No income verification such as tax returns, operating statements, etc. are required. Debt ratios are calculated using the stated income. These programs allow owners of small businesses to use their actual cash flows, rather than the net incomes normally reported in tax filings. Higher interest rates on these products serve to compensate lenders for their higher risks. (See definition of “debt ratio” above.)

Non-Assumption Clause – A provision in a loan prohibiting a mortgage’s transfer to another borrower without lender approval.

Non-conforming Loan – A loan that does not meet the underwriting requirements of Fannie Mae and Freddie Mac. The majority of loans fall into this category.

Nonliquid Asset – An asset that cannot easily be converted into cash.

Non-Qualifying Loan – A loan in which the buyer is not obligated to qualify under traditional bank financing requirements.

Non-Recurring Closing Costs – One-time closing fees for appraisal, credit report, loan points, title insurance, home inspection, and so on.

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.

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.

Note Broker – An individual acting as an intermediary between the holder of an existing note and that note’s prospective buyer.

Notice of Default – The initial action that a lender takes when a mortgage payment is late and any attempts to reconcile the issue out of court have not been successful.