Negative amortization

This happens when the interest due on the loan is more than the monthly payments. The balance unpaid interest is added to the balance of the loan. In negative amortization the loan of the borrower increases and thus he ends up owing more than the original loan.

No-cost loan

No-cost loans are loans where the lender may not directly charge the borrower like appraisal, recording, settlement fees etc. This has to be clarified with the lender before taking the loan. The borrower has to pay a higher interest rate for a no-cost loan.

Note

A legal document stating the obligation of the borrower to repay the stated sum of money at a specified interest rate at a specified date or on demand.

National Automobile Dealers Association

Often referred to as NADA. Publishes an Official Used Car Guide that is helpful to customers by supplying retail prices for most used cars and provides car dealers with a confidential list of trade in values.

National bank

These banks are chartered by our government and it is mandatory that they are members of the Federal Reserve System.

National Do Not Call Registry

By calling 1-888-382-1222, you can register your phone numbers so that telemarketers cannot call you for a period of five years.

Need

What the cost of a higher education is minus the expected family contributions and outside resources, like scholarships and grants.

Need-based pricing

A method of pricing a home based on what the owner wants to get for the property without regard to what other homes are selling for. This method is not commonly advisable.

Negative equity financing

A situation when a new car buyer owes more on their trade in than the car is worth.

Nellie Mae

An affiliate of Sallie Mae loan servicing. A large non profit provider of student loans under the Federal Family Education Loan Program.

Net cash flow

Investments that generate income after the principal, interest and insurance expenses have been paid.

Net income

The amount left of your income after taxes have been paid.

Net worth

The total sum of all of your assets minus all debts. Assets include your home, car, investments, etc. Debts include mortgages, credit cards, and loans.

NFCC (National Foundation for Credit Counseling)

An organization that educates consumers about using and managing credit. This nonprofit company is the parent group for Consumer Credit Counseling Services.

No cash out refinance

A home mortgage for a lower interest rate in an amount that doesn't exceed closing costs.

No-doc loan

A shortened term for “No documentation loan”. When a borrower supplies a minimum amount of information and the lender makes their decision based on credit history and the size of the down payment. These loans typically have a higher interest rate.

No-documentation loan

When a borrower supplies a minimum amount of information and the lender makes their decision based on credit history and the size of the down payment. These loans typically have a higher interest rate.

Non-liquid asset

A property or possession that cannot easily be turned into cash.

Non-recurring closing costs

The fees paid at the close of a real estate settlement. The fees cover loan origination, the title insurance, escrow fees, and credit report management.

Note rate

A percentage that a borrower pays for the use of the money. Also expressed as the annual percentage rate as disclosed in the terms of the loan.

Notice of default

A documentation that is made public that states that the borrower is in default and legal action may be taken. There are many options available to borrowers to help them avoid this situation.

Non-Assumption clause

statement in a mortgage contract forbidding the assumption of the mortgage by another borrower without the prior approval of the lender.

Non performing asset

An acronym for non sufficient funds. An NSF is issued by a bank when there is not enough money in the account to cover the amount of the check or transaction.

NSF

An acronym for non sufficient funds. An NSF is issued by a bank when there is not enough money in the account to cover the amount of the check or transaction.

Naked call

A naked call is the offer of a call option for a security that's not owned. If the security's trading price changes such that the exercise price on the option represents an attractive investment, the option seller may have to buy the shares on the open market and sell them at a loss to the option holder. For this reason, selling naked call options is a very risky strategy.

Named perils insurance policy

A named perils insurance policy is a type of homeowner's insurance, where the property is covered against damage resulting from specific circumstances, such as fire or theft. A named perils policy provides a more specifically defined set of coverages relative to a conventional, broad coverage policy.

National Association of Insurance Commissioners - NAIC

The National Association of Insurance Commissioners (NAIC) is the organization of insurance regulators from the 50 states, the District of Columbia, and the five U.S. territories. The NAIC provides a forum for the development of a uniform policy when uniformity is appropriate.

National Association of Investors Corporation - NAIC

National Association of Investors Corporation, or NAIC, is a non-profit entity that provides education, tips, and resources pertaining to the practice of investing. The NAIC is comprised of investors, investing groups, individuals, and corporations.

National Association Of Mortgage Brokers - NAMB

National Association of Mortgage Brokers, or NAMB, is a U.S. trade association that educates, sets standards for, and represents the interests of mortgage brokers. Mortgage brokers are individuals or entities that assist mortgage applicants in obtaining home financing.

National Association Of Real Estate Investment Trusts - NAREIT

National Association of Real Estate Investment Trusts, or NAREIT, is a U.S. trade organization that acts as the voice of REITs and other publicly traded real estate companies. The NAREIT community is comprised of REITs and businesses and individuals who operate in the REIT and related industries.

National Credit Union Association

National Credit Union Association, or NCUA, is the chartering agency for federal credit unions in the U.S. The NCUA also manages the National Credit Union Share Insurance Fund (NCUSIF), and promotes consumer education through a variety of programs. The NCUSIF insures consumer deposits that are held in credit unions, just as the FDIC does for banking institutions.

National Credit Union Share Insurance Fund

The National Credit Union Share Insurance Fund (NCUSIF) insures consumer deposits held in credit unions, just as the FDIC does for banking institutions.

National Foundation for Consumer Credit

National Foundation for Consumer Credit, or NFCC, is a non-profit organization that accredits consumer credit counseling agencies.

National issuers

National issuers are large banking entities that offer consumer credit cards, among other services. Bank of America, for example, is a national issuer.

NCUA

NCUA stands for National Credit Union Association. The NCUA is the chartering agency for federal credit unions in the U.S. The NCUA also manages the National Credit Union Share Insurance Fund (NCUSIF), and promotes consumer education through a variety of programs. The NCUSIF insures consumer deposits that are held in credit unions, just as the FDIC does for banking institutions.

NCUSIF

NCUSIF stands for National Credit Union Share Insurance Fund (NCUSIF). The NCUSIF insures consumer deposits that are held in credit unions, just as the FDIC does for banking institutions.

Needs approach

The needs approach is a type of analysis that estimates how much life insurance an individual requires. The analysis estimates the expenses that will have to be covered if the insured were to pass, including funeral costs, legal fees, mortgage expenses, debt payments, future living expenses, etc.

Needs-based pricing

Needs-based pricing is one method of establishing an asking price for an object that's to be sold. In real estate, for example, a seller might price the home to recover the initial purchase price, plus the cost of any renovations. Unfortunately, if this asking price is higher than what the market will bear, the home will not sell.

Negative amortization limit

Negative amortization limit is a cap on the amount of accrued interest that can be added to the principal balance of a loan that allows negative amortization. Negative amortization occurs when a loan's minimum payments are less than that period's accrued interest. The shortfall is added into the loan balance at the end of each period. The limit is usually defined as a percentage of the opening loan balance.

Negative carry

Negative carry occurs when the cost to finance an investment purchase exceeds the yield produced by the investment. For example, if an investor borrows money at 8 percent interest, and uses those funds to purchase a bond that pays 5 percent interest, the investor would be losing 3 percent interest on the investment.

Negative equity

Negative equity occurs when the value of an asset securing a loan dips below the loan balance. For example, an individual could take out a mortgage loan to finance 100 percent of a home purchase. If the home's value subsequently drops, due to recession, for example, the homeowner would have negative equity. Selling the home would require the homeowner to pay out of pocket to cover the difference between the sales price and the loan balance.

Negative points

Negative points are used by a lender to rebate either a mortgage broker, or a mortgage borrower, for a mortgage that carries a higher-than-par interest rate. This rebate might be paid as a fee to the mortgage broker, or can be paid to the borrower to offset closing costs. No-cost mortgage loans use negative points; the borrower essentially trades a higher interest rate for lower upfront costs.

Negative yield curve

A negative yield curve describes an economic environment characterized by long-term yields being lower than short-term yields. A simple example of this is when a five-year CD pays 3 percent, and a six-month CD pays 4 percent. Negative yield curves often precede economic recession. The negative yield curve is also called an inverted yield curve.

Negative-equity financing

Negative-equity financing is a loan that's funded for an amount that exceeds the value of the collateral asset. This can happen with car loans; a buyer might want to trade in a vehicle that's depreciated below the outstanding loan balance. The new auto loan would have to cover the cost of the new car, plus the difference between the old loan balance and the old vehicle's trade-in value.

Negatively amortizing loan

A negotiable instrument is a written document that states a promise to pay the holder. Checks, acceptances, and bills of exchange are negotiable instruments.

Negotiable instrument

A negotiable instrument is a written document that states a promise to pay the holder. Checks, acceptances, and bills of exchange are negotiable instruments.

Negotiable order of withdrawal (NOW) account

A negotiable order of withdrawal (NOW) account is an interest-earning bank deposit account against which the accountholder can write drafts.

Nest egg

Nest egg is a slang term for an amount of money that's saved for a special purpose. Individuals commonly build nest eggs for things like college tuition, retirement, or a new home purchase.

Net debt to assessed valuation

Net debt to assessed valuation is a measure of the financial health of a municipality. As such, it's an important metric in evaluating the risk of bonds issued by that municipality. The ratio is calculated by the value of the municipal's net debt divided by the combined taxable value of properties in that municipality's jurisdiction.

Net debt to estimated valuation

Net debt to assessed valuation is a measure of the financial health of a municipality. As such, it's an important metric in evaluating the risk of bonds issued by that municipality. The ratio is calculated by the value of the municipal's net debt divided by the combined taxable value of properties in that municipality's jurisdiction.

Net interest margin securities - NIMS

Net interest margin securities, or NIMS, are investment vehicles that pay investors the excess cash flows generated from the repayment of an underlying group of mortgage loans.

Net operating loss (NOL)

A net operating loss (NOL) occurs when a business is unprofitable from a tax standpoint. NOLs can be used to recover past taxes paid or carried forward to offset future taxes.

New home sales

New home sales is an economic indicator that tracks the number and prices of new homes sold during a month. The new homes sales metrics are published by the U.S. Department of Commerce's Census Bureau.

Niche banks

Niche banks are financial institutions that target a specific customer base. For example, a bank that aligns its marketing messages and product offerings to attract people who enjoy extreme roller coasters would be a niche bank.

Nigerian Scam

Nigerian scam is the name of a prevalent hoax that lures an individual into handing money over to a stranger. The scam often involves an email letter that describes a huge cash commission; the commission is said to be available to the person who helps facilitate a large monetary transfer. The scammer will ask for money upfront to cover transaction costs. If the money is provided, the scammer will either try to get more money, or simply disappear.

NIMBY (Not In My Backyard)

NIMBY stands for Not In My Backyard. The term refers to the tendency for individuals to oppose having certain developments located near their homes, even though they may not be opposed to those developments in theory. Consider a halfway house, for example; residents might argue against having a halfway house located next door, even if they aren't uniformly opposed to halfway houses in general.

No documentation mortgage - no doc

A no documentation mortgage, also called a no doc, is a real estate property loan that doesn't require the borrower to present paperwork to verify his income during the approval process. No doc mortgages are more expensive than fully documented mortgages due to the chance that the borrower might overstate his earnings.

No fault insurance

No fault insurance is a plan that provides accident coverage to the insured, regardless of who caused the incident. Some U.S. states have no-fault auto insurance laws, where insureds recover damages from their own insurance companies. Such a system eliminates the need to sue the other party and establish fault.

No income/no asset mortgage - NINA

A no income/no asset mortgage, or NINA, is a real estate property loan that can be approved without documentation that verifies the borrower's regular earnings and asset base. Usually, the lender will verify the borrower's employment. NINAs are more expensive than traditional mortgage loans, due to the risk that the borrower will overstate his qualifications to obtain a loan approval.

No-fee mortgage

A no-fee mortgage is a real estate property loan that doesn't have any upfront fees or closing costs. Generally speaking, a no-fee mortgage will have a slightly higher interest rate than a traditional mortgage.

No-lien affidavit

A no-lien affidavit is a written statement that a particular property has no claims on the title. The no-lien affidavit is signed by the property owner.

Nominee recipient

A nominee recipient is a U.S. taxpayer who receives a 1099-DIV or 1099-INT for dividend or investment earnings that partially belong to another party or parties. The nominee recipient must provide the IRS and the other parties with the breakdown of each party's taxable earnings.

Non-amortizing loan

A non-amortizing loan is structured with interest only or minimal principal payments, such that the balance is not steadily paid down to zero at maturity. At some point, the borrower will need to refinance the principal amount, or make a large balloon payment.

Non-callable

Non-callable describes a financial instrument, such as a preferred stock or bond, that can't be redeemed by the issuer before a specified maturity date. The non-callable feature is attractive from an investor's standpoint because it eliminates prepayment risk.

Non-conforming loan

A non-conforming loan is a debt arrangement that doesn't meet certain defined standards. Most often the term is used in reference to mortgages; a non-conforming mortgage doesn't meet federal standards that qualify a loan for repurchase or guarantee by Fannie Mae and Freddie Mac.

Non-contestability clause

A non-contestability clause is legal verbiage that punishes a beneficiary for attempting to dispute a will. Such a clause may also be used in a life insurance policy to prohibit the insurance provider from denying payment due to an error on the application. Usually, the clause gives the insurance provider a limited time period for contesting a claim. Non-contestability clauses, particularly with respect to wills, don't always hold up in court.

Nondischargeable debt

Nondischargeable debt is an obligation that can't be wiped away by a bankruptcy court. Bankruptcy courts aren't authorized to remove a debtor's personal obligation for tax claims, child support claims, alimony claims, and other specified debt types.

Non-financial asset

Nondischargeable debt is an obligation that can't be wiped away by a bankruptcy court. Bankruptcy courts aren't authorized to remove a debtor's personal obligation for tax claims, child support claims, alimony claims, and other specified debt types.

Non-owner occupied

Nondischargeable debt is an obligation that can't be wiped away by a bankruptcy court. Bankruptcy courts aren't authorized to remove a debtor's personal obligation for tax claims, child support claims, alimony claims, and other specified debt types.

Nonpassive income

Nonpassive income describes earnings that are actively generated, such as wages and business profits where the taxpayer materially participates in the business operations. This compares to passive income, which is generated through investment vehicles. The classification of earnings as nonpassive or passive is important in the calculation of income taxes.

Nonpayroll withholding

Nonpassive income describes earnings that are actively generated, such as wages and business profits where the taxpayer materially participates in the business operations. This compares to passive income, which is generated through investment vehicles. The classification of earnings as nonpassive or passive is important in the calculation of income taxes.

Nonperforming asset

A nonperforming asset is a lending and leasing term used to describe an obligation that's not being paid as promised. While loans and leases are liabilities from the consumer's perspective, they're assets from the lender's perspective. When a debtor stops making payments as promised, the asset is no longer producing the desired results for the lender. The term can also be used more generally in reference to any asset that's not generating income.

Nonproductive loan

A nonproductive loan is a commercial debt obligation that doesn't enhance or improve the production levels of an economy. A loan that restructures a company's existing debt would be nonproductive, while a loan that finances the construction of a new manufacturing facility would be productive.

Non-qualified stock options

Non-qualified stock options, or NSOs, are a form of employee compensation that give the employees the right to purchase the employer's stock at a stated price. The non-qualified descriptor means that these options are not eligible for deferred tax treatment, and a tax event occurs in the year the employee exercises the option. The employee is taxed on the difference between the market price of the stock and the exercise price.

Non-qualifying investment

A non-qualifying investment is any asset purchased for financial gain that's not eligible for preferential tax treatment. Securities held within an IRA, for example, qualify for certain tax advantages, while a regular savings deposit does not.

Nonrefundable credit

A nonrefundable credit reduces tax liability dollar-for-dollar, but can't reduce tax liability to less than zero. In other words, a nonrefundable tax credit might reduce one's tax liability to zero, but it would never result in the government owing money back to the taxpayer.

Nonresident alien

A nonresident alien is an individual who doesn't live in the U.S., and is not a citizen of the U.S. Nonresident aliens are taxed by the U.S. on income generated from U.S. sources.

Non-revolving credit card

A non-revolving credit card is a credit account that requires payment of the full balance outstanding at the end of each billing period.

Nontaxable distribution

A nontaxable distribution is a payment made by a company to its shareholders; this payment is not treated as income or as a regular dividend. Instead, the payment is accounted for by the shareholder as a reduction in cost basis. The tax effect of the distribution will then be realized when the share is sold.

No-ratio mortgage

A no-ratio mortgage doesn't require the calculation of the borrower's debt-to-income ratio during the approval process. The lender will, instead, base the mortgage underwriting on other factors, such as the borrower's downpayment and credit history. This may be appropriate in cases where the borrower has a volatile income stream. No-ratio mortgages are considered riskier than conventional mortgages and, therefore, are more expensive.

Normal yield curve

A normal yield curve is an interest rate environment where long-term debt instruments (such as bonds) exhibit higher returns than similar short-term debt instruments. A normal yield curve is also called a positive yield curve.

Note loan

A note loan is a debt facility that's not supported by collateral.

Notice of assessment - NOA

Notice of assessment, or NOA, is a yearly tax statement sent by a taxing authority to taxpayers. U.S. property owners receive notices of assessment for property taxes owed. Other taxing authorities, such as the Australian Taxation Office and Canada Revenue Agency, send notices of assessment for income taxes.

Notice of sale

A notice of sale is an official announcement of an upcoming sale transaction. Most often, the term is used in reference to foreclosure, where the lender is required to announce its plans to sell off the collateral. A municipal bond issuer may also issue a notice of sale as a way of requesting bids from prospective underwriters.

Notional principal amount

Notional principal amount, in an interest rate swap contract, is the hypothetical, agreed-upon amount used to calculate interest payments owed to each party to the agreement. In a swap contract, the notional principal amount is not actually transferred from one party to another.

Novation

Novation is the replacement of one agreement or obligation with another, where all parties to a contract agree to the change. Novation might be used to transfer an obligation to another party, or to replace an old debt with a new one.

NOW account

A NOW, or negotiable order of withdrawal, account is an interest-earning, bank deposit account against which the accountholder can write drafts.

Number of free transactions per month

Number of free transactions per month sets a limit on how many account transactions a depositor is allotted during a one-month period. If the accountholder requests transactions in excess of the stated amount, she will be charged an extra fee for each extra transaction. Accounts that specify a number of free transactions per month usually have lower maintenance fees relative to accounts that offer unlimited free transactions.

Nuncupative will

A nuncupative will is an individual's verbal statement describing how he would like his personal property distributed after his death. Nuncupative wills must have at least two witnesses, but are still difficult to enforce.