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Negative Amortization
Some adjustable rate mortgages
allow the interest rate to fluctuate
independently of a required minimum
payment. If a borrower makes the minimum
payment it may not cover all of the
interest that would normally be due
at the current interest rate. In essence,
the borrower is deferring the interest
payment, which is why this is called
deferred interest. The deferred interest
is added to the balance of the loan
and the loan balance grows larger instead
of smaller, which is called negative
amortization.
No Cash-out Refinance
A refinance transaction which is not
intended to put cash in the hand of
the borrower. Instead, the new balance
is calculated to cover the balance
due on the current loan and any costs
associated with obtaining the new
mortgage. Often referred to as a rate
and term refinance.
No-Cost Loan
Many lenders offer loans that you
can obtain at no cost. You should
inquire whether this means there are
no lender costs associated with the
loan, or if it also covers the other
costs you would normally have in a
purchase or refinance transactions,
such as title insurance, escrow fees,
settlement fees, appraisal, recording
fees, notary fees, and others. These
are fees and costs which may be associated
with buying a home or obtaining a
loan, but not charged directly by
the lender. Keep in mind that, like
a no-point loan, the interest rate
will be higher than if you obtain
a loan that has costs associated with
it.
Note
A legal document that obligates a
borrower to repay a mortgage loan
at a stated interest rate during a
specified period of time.
Note Rate
The interest rate stated on a mortgage
note.
Notice of Default
A formal written notice to a borrower
that a default has occurred and that
legal action may be taken.
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