Real Estate Glossary: Terms starting with letter 'N'

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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 operating income or loss:  Earnings minus operating expenses, but before taxes and interest are subtracted.

  • Net worth:  The value of all of a person's assets, including cash, minus all liabilities.

  • Ninety-five percent rule (95% Rule):  An IRS rule that allows any number of properties to be treated as Replacement Property in a Like-Kind Exchange if the fair market value of the properties actually received by the end of the Exchange Period is at least ninety-five percent of the aggregate fair market value of all potential Replacement Properties identified.

  • 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).

  • Nonprobate property:  Property owned by a decedent or in which the decedent had an interest on the date of her death which passes to an heir by provisions other than a will or the laws of intestacy. For example, assets held jointly or by a trust.

  • Nonrecourse loan:  A loan where the debtor does not assume personal responsibility for the loan.

  • 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.

  • 180-day period:  Refers to the 180 days the IRS gives an Exchanger to complete the acquisition of a Replacement Property to qualify for a Like-Kind Exchange. The first day of the 180-day period is the day after the transfer of the Relinquished Property.