Loan Services: Mortgage Loans
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Negative amortization/Deferred interest
A condition created when a loan payment is less than interest alone and the difference is added to the principal
An Adjustable Rate Mortgage (ARM) gives you flexible payment options. You can make the minimum monthly payment and defer interest, pay interest only, or pay an amount to amortize the loan over 15 or 30 years. Any difference between the interest accrued and the actual payment you make is added to the loan balance. This is known as negative amortization.
See: Adjustable rate mortgage (ARM), Payment cap
Compare: Amortization
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Net rental income
The total annual earnings from a rental property
Any rental income is included as part of your yearly income. Normally, lenders will only apply 75% of this amount to your income leaving the remaining 25% to account for any vacancies that year.
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Non-conforming loans
Any loan that allows you to borrow over a certain amount set by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac)
See: Jumbo loan
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Non-institutional lender
Any non-traditional lender
Banks and savings and loan associations are traditional lenders, but other companies also offer mortgage lending, such as mortgage companies, title companies, universities, pension funds and individual investors.
See: Mortgage banker
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Non-liquid asset
A valuable item not easily converted into cash
Investments, such as real estate, cars or boats, are examples of non-liquid assets since they can take a long time to sell.
Compare: Liquid asset
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Note
A written promise to pay back money at a specified time
See: Promissory note
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Origination fee
A service fee charged by the lender and/or broker that is due on the closing date
This fee is usually a percentage of the loan amount.
See: Closing costs
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