Real Estate Glossary N

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Natural Hazards Disclosure

The Natural Hazards Disclosure Act of California, effective June 1, 1998 (as amended June 9, 1998), requires that Seller(s) of real property and their Agent(s) provide any prospective Buyer(s) with a "Natural Hazard Disclosure Statement" when the property being sold lies within one or more state-mapped hazard areas

negative amortization

An increase in the outstanding balance of a mortgage that occurs when the monthly payment is not large enough to cover the 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.

No Closing Cost Loan

A loan in which the fees the borrower(s) are not required to pay cash out-of-pocket at closing for the normal closing costs. The lender typically includes the closing costs in the principal balance or charges a higher interest rate than for a loan with closing costs to cover the advance of closing costs.

net worth

The value of all of a person's assets, including cash, minus all liabilities.

non-conforming loan

See jumbo loan.

non-liquid asset

An asset that cannot easily be converted into cash.

"No out of pocket cost" loan

A loan in which the fees the borrower(s) are not required to pay cash out-of-pocket at closing for the normal closing costs. The lender typically includes the closing costs in the principal balance or charges a higher interest rate than for a loan with closing costs to cover the advance of closing costs.

note

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

note rate

The interest rate stated on a mortgage note.

notice of default

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