Real Estate Definitions
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Negative Amortization A gradual increase in loan debt that occurs when the monthly payment does not cover the entire principal and interest due. The shortfall is added to the remaining balance which creates "negative" amortization. Negative-equity Financing Financing that is available for those who want to purchase a new vehicle, but owe more on their trade-in than the vehicle is worth. Net Cash Flow Incremental after-tax income plus depreciation expense resulting from investment. Net Income The difference between effective gross income and a person's expenses. The term is qualified as net income before depreciation and debt. Net Interest Margin Net interest income (the difference between interest income and interest expense) as a percentage of average total assets. Net Operating Loss (NOL) A net loss for the tax year because of business or casualty losses. Taxpayers may use an excess loss of one year as a deduction for certain past or future years. Net Worth The total of all assets minus the total liabilities of an individual or company. Assets can include property, vehicles, or investments whereas liabilities are debts such as mortgages and credit card bills. Netting The offsetting with a counter-party of financial obligations or payments one is owed with those one is entitled to receive, thus reducing the costs arising out of payment settlements. Netting is also used as a risk management tool to help counter-parties reduce their exposure to credit risk. Niche Banks Small banking centers that cater to certain communities or specialized industries. Niche banks are thriving in the fallout from mega-bank mergers. NIMBY (Not In My Backyard) A term used to describe opposition from residents to the introduction of a controversial service or structure into their neighborhood. Low income housing, group homes, slaughter houses, waste dumps, and prisions are all examples of things residents would not want built in their community. No-doc Loan See "No-documentation Loan". No-documentation Loan A loan that does not require the applicant to provide much personal information. The applicant usually provides their name, address, Social Insurance Number (to pull credit reports), and contact information for an employer, if applicable. The underwriter simply approves or denies the loan based on the applicant's credit history, the appraised value of the property, and the amount of down payment. A large down payment is usually required for this type of loan. No Money Down Mortgage A true 100% mortgage financing product that is available in Canada. This type of mortgage generally has a higher interest rate. Non-assumption Clause A provision or condition of a loan agreement that prohibits the borrower from transferring the mortgage to another borrower without permission from the lender. Non-dischargeable Debt Debt that cannot be eliminated in bankruptcy such as Federal taxes. Non-liquid Asset An asset or possession that cannot be converted into cash quickly. Stocks and bonds are liquid assets because they are easy to sell quickly, but property is considered a non-liquid asset because there is no guarantee it will sell within a certain time period. Non-owner Occupant A borrower who purchases a property for investment or rental purposes and will not occupy the property. Non-recurring Closing Costs Fees that are paid once, usually at a real-estate closing. Closing costs can include origination fees, appraisal costs, points, and title insurance. Non-refundable Credit Tax credits that reduce a person's tax liability dollar-for-dollar. Non-refundable credits can bring a tax bill down to nothing. Non-resident Alien A non permanent resident or someone who is not a Canadian citizen, and who is usually taxed on income from Canadian resources. North American Free Trade Agreement (NAFTA) An agreement between the United States, Canada, and Mexico that allows for freer trade between the three countries. Note A legal acknowledgment of a debt and the promise to pay it back. The note details the loan amount, interest rate, and loan term. Note Rate The percentage paid by a borrower for the use of money, usually expressed as an annual percentage on a promissory note. Notice of Assessment A form issued by the Federal Government when personal taxes are complete. A notice of assessment shows a breakdown of the given years income along with the balance owing or the refund amount. Notice of Default The step in the foreclosure process where the lender informs the court that the borrower is in arrears. NSF or N.S.F. The sum of money charged to an account holder when his or her account does not contain enough money to cover a cheque. The bounced cheque is returned to the party who cased it without receiving payment. Also referred to as a returned or "bounced" cheque charge or non-sufficient funds fee. N.S.F. Cheque NSF means Not Sufficient Funds. If a cheque is returned to the person who wrote it because it is NSF, it means there was not enough money in the person's bank account to cover the amount of the cheque. Account holders are charged a fee for writing NSF cheques. Number of Free Transactions per Month The number of transactions an account holder is allowed to make before being charged a fee. If the limit is exceeded, a per-item charge is applied. Some accounts offer an unlimited number of free transactions or no free transactions per month. |
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