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Mortgage glossary: Letter N |
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Negative Amortization A neg-am loan is an adjustable rate mortgage that can have two interest rates, the contract rate or the fully indexed rate. The contract rate is the minimum agreed-upon rate the consumer may pay; sometimes the contract rate is lower than the fully indexed rate. The borrower has a choice of which rate to pay, but if the contract rate is lower than the fully indexed rate, that difference is added back to the loan. If your contract payments are only $500 but the fully indexed rate is $700 and you pay only the contract rate, $200 is added back into your original loan amount. Not for the fainthearted, nor for those with little money down.
NINA No Income, No Asset mortgage. This type of loan does not require that the borrower prove or otherwise document any income or asset whatsoever.
No-Fee Loan A loan where your lender pays closing costs for you, if you agree to a slightly higher interest rate.
Nonconforming Loans whose amounts are above current Fannie or Freddie limits. See also Jumbo Loan.
Note A promise to repay. It may or may not have property involved and may or may not be a mortgage.
Note Modification Taking the original terms of a note, and without changing any other part of the obligation or title, reducing the interest rate for the remaining term of the loan. A note modification means you can't ''shop around'' for the best rate to reduce your rate; instead, you must work with your original lender who still services your mortgage. In a modification, nothing can change except the rate.
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