| Term |
Definition |
| Negative Amortization
|
Occurs when your monthly
payments are not large enough to pay all the interest due on the
loan. This unpaid interest is added to the unpaid balance of the
loan. The danger of negative amortization is that the buyer ends up
owing more than the original amount of the loan. |
| Net Effective Income.
|
The borrower's gross income
minus federal income tax. |
| No-Doc Mortgage |
A no-documentation or
"no-doc" mortgage is a product that certain lenders offer to
borrowers which generally requires a down payment of at least 5% to
30% or more of the home purchase price or who generally have at
least 25% equity in their home. Loan programs featuring lower down
payments (5-24%) are also available to borrowers with excellent
credit. No-doc mortgages are generally a wise choice for
self-employed people, those who do not wish to verify their income,
and those with a brief or blemished credit history, or no credit.
The benefits of a no-doc mortgage include a shorter application
process since you are not required to provide income, employment or
asset documentation, as well as a streamlined approval process
through the lender because there is little subsequent verification.
However, no doc mortgages generally will be at slightly higher
interest rates and are offered by fewer lenders. |
| Non-Assumption Clause
|
A statement in a mortgage
contract forbidding the assumption of the mortgage without the prior
approval of the lender. |
| Non-Conforming Loan |
A conventional home
mortgage that does not meet the criteria of Fannie Mae or Freddie
Mac for various reasons including loan amount, loan characteristics
or underwriting guidelines. Non-Conforming loans usually incur a
higher rate and/or points.
|
