Real Estate Glossary

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Negative Amortization
A loan payment schedule in which the outstanding principal balance goes up, rather than down, because the payments do not cover the full amount of interest due. The unpaid interest is added to the balance. Negative amortization can occur when an ARM has a payment cap that results if monthly payments are not high enough to cover the interest due.

Negative Cash Flow
A situation in which expenditures required to maintain an investment exceed income received from the investment.

Net Income
Profit from property or business after expenses have been deducted; effective gross income less operating expenses.

Net Worth
The value of all assets minus all liabilities.

No Cash-out Refinance
A refinance transaction which is not intended to put cash in the hand of the borrower. Instead, the new balance is calculated to cover the balance due on the current loan and any costs associated with obtaining the new mortgage. Often referred to as a "rate and term refinance."

Note
A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.

Notice of Default
A formal written notice to a borrower that a default has occurred and that legal action may be taken.

Notice of Trustee Sale
In some states, a legal document recorded by a trustee for the lender when the default on a property is not met within the time required. This provides notice that the property is scheduled for an auction or trustee sale.