Real Estate Terminology: Glossary For You: Mortgages N through S

And more mortgage terminology defined, words begining with the letters N through S. We hope you find these useful and again ask that if you find a term you do not understand, please feel free to ask us to provide a definition:

Negative Amortization -- Amortization in which the payment made is insufficient to fund complete repayment of the loan at its termination. Usually occurs when the increase in the monthly payment is limited by a ceiling. The portion of the payment which should be paid is added to the remaining balance owed. The balance owed may increase, rather than decrease over the life of the loan.

PITI -- Principal, interest, taxes and insurance, which comprise your monthly mortgage payment.

Points -- The amount paid either to maintain or lower the interest rate charged. Each point is equal to one percent (1%) of the loan amount (i.e., two points on a 0,000 mortgage would equal ,000). More...

Prepayment Penalty -- A fee paid to the lending institution for paying a loan prior to the scheduled maturity date.

Qualifying Ratios -- Comparisons of a borrower's debts and gross monthly income.

Right to Rescission--The legal right to void or cancel your mortgage contract in such a way as to treat the contract as if it never existed. Right of rescission is not applicable to mortgages made to purchase a home, but may be applicable to other mortgages, such as home equity loans.

Security Interest -- An interest that a lender takes in the borrower's property to assure repayment of a debt.

Servicing a Loan -- The ongoing process of collecting your monthly mortgage payment, including accounting for and payment of your yearly tax and/or homeowners insurance bills.