Real Estate For Sale at Spruce Creek

Learn more about Real Estate at Spruce Creek Fly-in

The BIGGEST MISTAKES Home Sellers Make...


Make no mistake; The current market is a Buyer's market for many price segments. High inventories, foreclosures, irrational fear, and a sharp contraction in financing availability have combined into a seller's nightmare. As trusted advisors, we will not sugar-coat a reality that stares at every one's face. Our advice to clients that come asking about selling their home is to wait. With the exception of homes in the higher price ranges, property values are drastically lower in these times of mass fear, be it real or imaginary. Properties in the mid and lower price ranges have suffered the most because of the reality that they led in the increases (as a percentage of value) during 2000-2006 and also because they represent the bulk of builders' over supply that has added to the high inventories.

In our local market, the Spruce Creek Fly-in and Port Orange areas, that number is around $750,000. Homes valued above that range have not had nor are expected to have the large declines of the other segments. However, all strategies of maximizing value are preempted by the needs of the seller. If you have to sell your home now in spite of the current conditions, you will benefit by following some guidelines to adjust to the market reality. Here are the TEN BIGGEST Mistakes home sellers make when selling their home in a tough market...

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Get mortgage with zero points or pay points to buy down the rate?


When banks quote loans, they often include several rates with various "points". The term points has multiple meanings in the mortgage world. Mortgage points can refer to loan origination fees (fees charged by the underwriter) or discount points (also known as loan discounts). A point is 1% of the loan amount. Paying discount points allows you to "buy down" your interest rate. Consider points as prepaid interest. The tricky part is trying to identify the best deal among different interest rates and different points.

Points are only a good option if you plan to keep the mortgage long enough to gain from the lower finance charges - as the cumulative savings will eventually cover the additional cost of paying the points upfront - and then some. Often you will find that getting a "zero-point" loan works best for those looking to refinance or sell in a few years.

As a rule of thumb, for a typical 30-year mortgage, each point you pay up front is worth about 1/8 of a percent off your interest rate. Since these points are interest payments, they're usually tax-deductible.

Generally speaking, it takes about five to seven years to recoup the cost of paying a point upfront. Here's the math. Let's say you take out a $100,000 30-year fixed mortgage, and you have the option of either paying 6% with no points or 5 3/4% with one point. With the 6% mortgage, your monthly payment will be $600. And with the 5 3/4% loan, it would be $584, a savings of $16 per month. After about 62 months, or a little over five years, you would have recouped the $1,000 point you paid upfront. And then you would start to benefit from the lower monthly payments.

But you must also consider how you might otherwise invest that $1,000. If you can beat the taxable equivalent of your mortgage rate (about 8% in the example above for those in the 25% tax bracket) then don't bother paying points. Invest the money instead.

This calculator can serve as a guide to compare different loan rates and point options to find the best alternative.

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Compare Average Home Prices Between Cities


Try this handy utility based on the Trulia© database that allows you to compare the average home values and trends between any two cities in the United States.

Compare Home Prices Between Two Cities

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When your mortgage is higher than your home value


For a variety of reasons, and especially true in these times, it is possible that the total debt on your home may be more than what the home is worth. Most of the time, this isn't a problem because time is the solution. Depending on how much you owe, just wait it out and the value of your home catches up.

Unfortunately, this could take years and this solution does not work for everyone. For example, you may be stuck in a situation where you absolutely have to sell your house, be it due to a career move, financial hardship, divorce, death, illness, or any other reason. The result is that you may have to move, but you can't sell your house and make enough on the sale to pay the closing costs.

So what do you do?

One option is to do nothing and not make your mortgage payment. That's a worst-case scenario because it impacts your credit rating more severely than anything else possibly can.

Another option is something called a "short sale." This is when you fess up to the lender, let them know about your hardship and ask them to accept less money than you owe.

Of course, the lender doesn't want to do that, but they also don't want to pay all the costs of foreclosing on a home, such as legal fees, repairing defects, placing it on the market, time it requires to sell, and getting the best price they can in what may be a market already overstressed with excess inventory. It is no wonder that the typical foreclosure costs a lender upwards of $70,000. This, of course, varies with the value of the home.

Lenders absolutely hate to foreclose, so they may be willing to consider a short sale even though they also hate the idea of writing down the value of a loan on their books.

A short sale involves a lot of paperwork, time and effort and it is best if you have a real estate agent or someone knowledgeable to help guide you through the process and give moral support. A lot of stress is involved.

The first step is to contact the Loan Service Department of your lender. That number will be in the documentation you receive about making your payment. Use the phone and the mail. Keep copies of everything.

The lender will ask you to submit a financial statement. They want to know that you really don't have the financial assets to repay the loan after you sell the home.

That's just the beginning, assuming they give a tentative agreement.

Your real estate agent still has to put the home on the market, find a buyer, and get a bona fide offer. Once that has been accomplished, you submit all contracts and paperwork to your lender for a decision. This takes a while because there are several decision makers involved. Your “lender” isn't usually your lender. They just service the loan for your actual lender, called the investor. Your paperwork is submitted to the investor for a decision. Due to securitization, your loan may have been sold multiple times since origination. Read the Primer on Sub-Prime Mortgages article for more information on how the bundling and securitization of loans complicated the current mortgage lending mess.

Assuming you have mortgage insurance on the loan, they are another decision maker in the process. Mortgage insurance covers lenders in the case of loan defaults. That’s how lenders can justify making high LTV (loan-to-value) loans.
If the investor and the insurer both agree, your short sale is approved, and you can sell your home. A short sale is basically a "forgiveness of debt." Historically, this type of transaction counted as income and you had to declare it to the IRS. However, President Bush recently signed a bill that waives the imputation of income as a result of debt forgiveness (H.R. 3648, The Mortgage Forgiveness Debt Relief Act of 2007). See your accountant for more information in this important topic. More information: Mortgage Cancellation - Legislative History.

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Orlando, Florida Live Traffic Webcams


See how is the traffic in Orlando, Florida right now before driving there from Spruce Creek. Here we have webcams at the most popular intersections streaming daily.

Just reload this page to view the latest image. Image times are at the lower right corner of each shot.










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HOW To SELL your Home, the one tip you must keep in mind...


There are many tips out there directed to sellers on how to best prepare their home for sale. Tips vary with the times but they all do make sense such as keeping the landcape nicely groomed, Touching up painted areas, Making sure the kids' stuff is picked up and not lying around, adding scents prior to a showing (hint: fresh baked cookies, cinnamon... ); even the latest craze: "staging", where you re-arrange furniture and other things to make the home decor more neutral and appealing, usually with the help of a consultant.

However, there is one thing that is most important to keep in mind when selling your home. No matter what else you do, if you don't follow this rule, your home sale adventure will prove to be frustrating...

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New Smyrna Beach Live Cam


Watch live the beach conditions at New Smyrna Beach...

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Daytona Beach Live Cam


Watch real-time the beach conditions at Daytona Beach...

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Mortgage Prepayment Calculator


Learn how the term of your mortgage can be reduced by even the smallest regular prepayments. The key is to be consistent every month...

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Watch BLOOMBERG TV Today...

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Why Use a Real Estate Agent?


Oh... the perennial question: Why should'nt I sell my home on my own and save the real estate agent's commission?. Watch this video of why it might not be such a good idea, especially during tough times like these...

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VULTURE Investing in Real Estate, a Viable Opportunity


In many parts of the country, housing prices are falling at double-digit rates. Florida has been hit hard since it lead in the price increases party of 2000-2005. This bad situation for homeowners represents a possible opportunity for savy investors. Money reporter Stacy Johnson explores what's next, and who might benefit...

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Florida Foreclosure SCAMS


Foreclosure ScamsForeclosure scams have sprung out in most areas of the country and have become most prevalent in Florida. Taking advantage of vulnerable homeowners undergoing foreclosure proceedings, these well organized scam artists come under the disguise of helping the owners keep their properties. However, the homeowners later realize that in the complex documents they signed, they have transferred the titles of their properties and have become renters in their own homes. As if that wasn't enough, soon after they get eviction notices by their "landlords". Watch the expose by CNN's reporters.

Foreclosure Scams 101 by Freddie Mac

In this new web commercial from Freddie Mac, learn to spot a foreclosure scam and find out how to avoid becoming victim to home foreclosure fraud.

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How to Improve your CREDIT SCORE


The ever important credit scores and how you can improve your own by a few simple steps.

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Four Things That Can Help or Hurt Your CREDIT SCORE


Your credit score is composed of many factors that depend on your credit history. Watch this video on how four of these factors can affect your credit score and prevent you from obtaining the best mortgage loan rates.

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The Real Estate Market Today


Watch Suze Orman explain the advantages and disadvantages of the current economic conditions when you need to Buy or Sell your real estate.

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Is NOW The Time To BUY Real Estate?


Watch Suze Orman talk about the buying opportunities presented by the current real estate slump. History has proven over and over that the most successful investors are those that buy when everyone is selling and sell when everyone is buying.

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What is a FICO Score? by Suze Orman


Watch this video of Suze Orman explaining what a FICO score is and its effect in the interest rate you get from your lender.

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The FICO Credit Score Blues


The "FICO Credit Score Blues" highlights a lot of the public's confusion and frustration about the ever important Credit Scoring System used by the reporting agencies. A low FICO score guarantees the highest interest rates in your mortgage loan. Watch this entertaining video.

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Volusia County Municipal ORDINANCE WATCH


Keep track of what your local municipalities new ordinances will be and what your elected officials are proposing in the near future. Exclusive for Volusia County and the local municipalities of Daytona Beach, Deltona, New Smyrna Beach, Holly Hill and Ormond Beach, the Volusia County Ordinance Watch provides a system to monitor upcoming ordinances related to real estate of all the municipalities in Volusia County.

Click on the Ordinance's summary description and the details about the proposed ordinance will appear in the window. Links are provided for any background material as well, including the actual ordinance and the agenda for the meeting or hearing in which the ordinance will be presented.

To view the ordinances, click HERE

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Carlos Bravo, founder and CEO of KARLHAUS REALTY


Carlos Bravo, CEO of KarlHaus RealtyCarlos is an Entrepreneur and former Fortune 500 Senior Executive with a broad background in structuring complex commercial transactions. Semi-retired at the age of 39 after founding and growing several businesses in High Technology, Manufacturing and Distribution, he has kept active as a private investor and advisor of strategy, public policy and corporate governance.

With long prior experience in Information Technology, Mergers and Acquisitions and as Management Consultant to the largest corporations on the world, he is uniquely qualified to advise on complex transactions in business acquisitions or divestitures and commercial and investment real estate. A long-time resident of the Spruce Creek Fly-in, he is an expert in Fly-in Real Estate properties.

He has served on the Boards of Directors of several private and public corporations as well as public policy organizations. He currently serves on the Boards of Pacific Airport Group (NYSE:PAC) the largest commercial airport operator in the Americas, Embry Riddle Aeronautical University, EagleNet Ventures, Otto Aviation and Karlhaus Development as well as on the Executive Advisory Board of the Daytona Beach International Airport Partnership and the Embry Riddle Technology Research Park. He has been interviewed and featured by CNN, the BBC of London, The Travel Channel, The Associated Press, and multiple national and international magazines. He has written numerous articles about technology, strategy, the economy and general business interest. His advice column published by InformationWeek is targeted to senior executives. He is the Editor of the Florida Real Estate Blog and The Spruce Creek Journal and a contributing writer to CNN online,, and many Web 2.0 Social networks.

Mr. Bravo was previously an Executive Officer and one of the original Shareholders of USinternetworking after leading the merger that built the company. USi is the pioneer in the Internet-based outsourcing of Enterprise Applications and E-commerce for a flat monthly fee inventing the “ASP” (Applications Services Provider) Industry. During Mr. Bravo’s tenure, USi launched its IPO which raised $145Million in 1999 and by 2000 its Market Cap reached over $6 Billion with 1,200 employees.

Carlos has been investing in Real Estate for over 25 years; During the 80’s and early 90’s he was involved in redevelopment efforts and property restoration though Bravo Investment Group. His family’s development business has built several Carlos Bravo, CEO of KarlHaus Realtythousand condominiums in South America, considered one of the toughest markets in the world due to the lack of financing facilities.

He Attended the University of Florida's school of Engineering and Northwestern University's Law and Business Schools and holds advanced degrees in Carlos Bravo is an avid sailor as well as an accomplished pilotAerospace Engineering (which incidentally, makes him a card-carrying real-life rocket scientist...), Applied Mathematics and Business.

View Carlos Bravo's profile on LinkedIn

His main home is in Spruce Creek, Florida where he lives with his wife and daughter and indulges his passions of flying his award-winning WWII-vintage aircraft as well as ocean sailing. An active member of the US Air Force Auxiliary, and appointed by the FAA as a Federal Aviation Safety Counselor, he holds FAA Commercial Pilot and Flight Instructor Certificates and is qualified to fly both Airplanes (single and multi-engine) and Helicopters. Carlos obtained his military training with the US Army (ROTC , Rangers). He has traveled extensively and speaks fluent English and Spanish as well as basic French and Italian.

Carlos Bravo in the WWII Stearman biplane

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GLOSSARY of Common Mortgage Terms


Karlhaus Realty™ has assembled this list of Common Mortgage Terms to assist you in your understanding of industry terms and concepts.

To add a term or ask a question, please

A  B  C  D  E  F  G  H  I  J  L  M  N  O  P  Q  R  S  T  U  V  W  Z  


A historical summary provided by a title insurance company of all records affecting the title to a property.
acceleration clause

Allows a lender to declare the entire outstanding balance of a loan immediately due and payable should a borrower violate specific loan provisions or default on the loan.

adjustable rate mortgage (ARM)

A variable or flexible rate mortgage with an interest rate that varies according to the financial index it is based upon. To limit the borrower's risk, the ARM may have a payment or rate cap. See also: cap.


Features of your home that fit your preferences and can increase the value of your property. Some examples include the number of bedrooms, bathrooms, or vicinity to public transportation.


The liquidation of a debt by regular, usually monthly, installments of principal and interest. An amortization schedule is a table showing the payment amount, interest, principal and unpaid balance for the entire term of the loan.

annual cap

See: cap.

annual percentage rate (A.P.R.)

The actual interest rate, taking into account points and other finance charges, for the projected life of a mortgage. Disclosure of APR is required by the Truth-in-Lending Law and allows borrowers to compare the actual costs of different mortgage loans.


An estimate of a property's value as of a given date, determined by a qualified professional appraiser. The value may be based on replacement cost, the sales of comparable properties or the property's ability to produce income.


A property's increase in value due to inflation or economic factors.


See: annual percentage rate.


See: adjustable rate mortgage.


Charges levied against a property for tax purposes or to pay for municipality or association improvements such as curbs, sewers, or grounds maintenance.


The transfer of a contract or a right to buy property at given rates and terms from a mortgagee to another person.


An agreement between a buyer and a seller, requiring lender approval, where the buyer takes over the payments for a mortgage and accepts the liability. Assuming a loan can be advantageous for a buyer because there are no closing costs and the loan's interest rate may be lower than current market rates. Depending on what is in the mortgage or deed of trust, the lender may raise the interest rate, require the buyer to qualify for the mortgage, or not permit the buyer to assume the loan at all.

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Mortgage with a final lump sum payment that is greater than preceding payments and pays the loan in full.

biweekly mortgage

A loan requiring payments of principal and interest at two-week intervals. This type of loan amortizes much faster than monthly payment loans. The payment for a biweekly mortgage is half what a monthly payment would be.


A certificate serving as security for payment of a debt. Bonds backed by mortgage loans are pooled together and sold in the secondary market.

bridge loan

A loan to "bridge" the gap between the termination of one mortgage and the beginning of another, such as when a borrower purchases a new home before receiving cash proceeds from the sale of a prior home. Also known as a swing loan.


An intermediary between the borrower and the lender. The broker may represent several lending sources and charges a fee or commission for services.


Where the buyer pays additional discount points or makes a substantial down payment in return for a below market interest rate; or the seller offers 3-2-1 interest payment plans or pays closing costs such as the origination fee. During times of high interest rates, buy-downs may induce buyers to purchase property they may not otherwise have purchased.


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A limit in how much an adjustable rate mortgage's monthly payment or interest rate can increase. A cap is meant to protect the borrower from large increases and may be a payment cap, an interest cap, a life-of-loan cap or an annual cap. A payment cap is a limit on the monthly payment. An interest cap is a limit on the amount of the interest rate. A life-of-loan cap restricts the amount the interest rate can increase over the entire term of the loan. An annual cap limits the amount the interest rate can increase over a twelve-month period.

certificate of reasonable value (CRV)

A Veteran's Administration appraisal that establishes the maximum VA mortgage loan amount for a specified property.

certificate of title

Document rendering an opinion on the status of a property's title based on public records.

closed-end mortgage

A mortgage principal amount that is fixed and cannot be increased during the life of the loan. See also: open-end mortgage.

closing costs

Costs payable by both seller and buyer at the time of settlement, when the purchase of a property is finalized. These costs can be up to ten percent of the mortgage amount and usually include but are not limited to the following:

Fees Paid to the Lender

Fees Paid in Advance

Other Charges

Origination fee
Discount points
Credit report fee
Appraisal fee
Assumption fee if loan is assumed

Interest from the closing date to the beginning of the 1st payment
Hazard insurance premium
Mortgage insurance premium

Title search and title insurance
Sales commissions
Legal and recording fees
Inspection and survey fees
Property taxes and other adjustments
Processing and document preparation fees

A claim to the title of a property that, if valid, would prevent a purchaser from obtaining a clear title.


Something of value pledged as security for a loan. In mortgage lending, the property itself serves as collateral for a mortgage loan.

commitment fee

A fee charged when an agreement is reached between a lender and a borrower for a loan at a specific rate and points and the lender guarantees to lock in that rate.


One who is individually and jointly obligated to repay a mortgage loan and shares ownership of the property with one or more borrowers. See also: co-signer.


An individually owned unit within a multi-unit building where others or the Condominium Owners Association share ownership of common areas such as the grounds, the parking facilities and the tennis courts.

conforming loan

A loan that conforms to Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) guidelines.

See also: non-conforming loan.

construction loan

A short-term loan financing improvements to real estate, such as the building of a new home. The lender advances funds to the borrower as needed while construction progresses. Upon completion of the construction, the borrower must obtain permanent financing or pay the construction loan in full.

consumer handbook on adjustable rate mortgages (C.H.A.R.M.)

A disclosure required by the federal government to be given to any borrower applying for an adjustable rate mortgage (ARM).

conventional loan

A mortgage loan that is not insured, guaranteed or funded by the Veterans Administration (VA), the Federal Housing Administration (FHA) or Rural Economic Community Development (RECD) (formerly Farmers Home Administration).

convertible mortgage

An adjustable rate mortgage (ARM) that allows a borrower to switch to a fixed-rate mortgage at a specified point in the loan term.


One who is obligated to repay a mortgage loan should the borrower default but who does not share ownership in the property. See also: co-mortgagor.


Rules and restrictions governing the use of property.


See: certificate of reasonable value


The borrower's privilege to make payments on a loan's principal before they are due. Paying off a mortgage before it is due may incur a penalty if so specified in the mortgage's prepayment clause.


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Money owed to repay someone.

debt-to-income ratio

The ratio between a borrower's monthly payment obligations divided by his or her net effective income (FHA or VA loans) or gross monthly income (conventional loans).

deed of trust

A document, used in many states in place of a mortgage, held by a trustee pending repayment of the loan. The advantage of a deed of trust is that the trustee does not have to go to court to proceed with foreclosure should the borrower default on the loan.

Department of Housing and Urban Development (HUD)

The U.S. government agency that administers FHA, GNMA and other housing programs.

discount points

Amounts paid to the lender based on the loan amount to buy the interest rate down. Each point is one percent of the loan amount; for example, two points on a $100,000 mortgage is $2,000.

down payment

The difference between the purchase price and mortgage amount. The down payment becomes the property equity. Typically it should be cash savings, but it can also be a gift that is not to be repaid or a borrowed amount secured by assets.


A clause in a mortgage or deed of trust allowing a lender to require immediate payment of the balance of the loan if the property is sold (subject to the terms of the security instrument).


Dwelling divided into two units. 


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Deposit in the form of cash or a note, given to a seller by a buyer as good faith assurance that the buyer intends to go through with the purchase of a property.


The right one party has in regard to the property of another, such as the right of a public utility company to lay lines.

Equal Credit Opportunity Act

A federal law prohibiting lenders and other creditors from discrimination based on race, color, sex, religion, national origin, age, marital status, receipt of public assistance or because an applicant has exercised his or her rights under the Consumer Credit Protection Act.


The value of a property beyond any liens against it. Also referred to as owner's interest.

escape clause

A provision allowing one party or more to cancel all or part of the contract if certain events fail to happen, such as the ability of the buyer to obtain financing within a specified period.


Money placed with a third party for safekeeping either for final closing on a property or for payment of taxes and insurance throughout the year.


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The price a property can realistically sell for, based upon comparable selling prices of other properties in the same area.

Fannie Mae

Nickname for Federal National Mortgage Association (FNMA).

Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac)

A quasi-governmental, federally-sponsored organization that acts as a secondary market investor to buy and sell mortgage loans. FHLMC sets many of the guidelines for conventional mortgage loans, as does FNMA.

Federal Housing Administration(FHA)

An agency within the Department of Housing and Urban Development that sets standards for underwriting and insures residential mortgage loans made by private lenders. One of FHA's objectives is to ensure affordable mortgages to those with low or moderate income. FHA loans may be high loan-to-value, and they are limited by loan amount. FHA mortgage insurance requires a fee of 1.5 percent of the loan amount to be paid at closing, as well as an annual fee of 0.5 percent of the loan amount added to each monthly payment.

Federal National Mortgage Association (FNMA or Fannie Mae)

A private corporation that acts as a secondary market investor to buy and sell mortgage loans. FNMA sets many of the guidelines for conventional mortgage loans, as does FHLMC. The major purpose of this organization is to make mortgage money more affordable and more available.

fee simple

The maximum form of ownership, with the right to occupy a property and sell it to a buyer at any time. Upon the death of the owner, the property goes to the owner's designated heirs. Also known as fee absolute.


See: Federal Housing Administration.

fifteen-year mortgage

A loan with a term of 15 years. Although the monthly payment on a 15-year mortgage is higher than that of a 30-year mortgage, the amount of interest paid over the life of the loan is substantially less.

fixed-rate mortgage

A mortgage whose rate remains constant throughout the life of the mortgage.

flood insurance

The Federal Flood Disaster Protection Act of 1973 requires that federally-regulated lenders determine if real estate to be used to secure a loan is located in a Specially Flood Hazard Area (SFHA). If the property is located in a SFHA area, the borrower must obtain and maintain flood insurance on the property. Most insurance agents can assist in obtaining flood insurance.


See: Federal National Mortgage Association.

Freddie Mac

Nickname for Federal Home Loan Mortgage Corporation (FHLMC)


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This includes amounts from a relative or a grant from the borrower's employer, a municipality, non-profit religious organization, or non-profit community organization that does not have to be repaid.

Ginnie Mae

Nickname for Government National Mortgage Association (GNMA).

good faith estimate

Estimate on closing costs and monthly mortgage payments provided by the lender to the homebuyer within 3 days of applying for a loan.

Government National Mortgage Association(GNMA or Ginnie Mae)

A government organization that participates in the secondary market, securitizing pools of FHA, VA, and RHS loans.

graduated payment mortgage (GPM)

A fixed-interest loan with lower payments in the early years than the later years. The amount of the payment gradually increases over a period of time and then levels off at a payment sufficient to pay off the loan over the remaining amortization period.


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A form of insurance that protects the insured property against physical damage such as fire and tornadoes. Mortgage lenders often require a borrower to maintain an amount of hazard insurance on the property that is equal at least to the amount of the mortgage loan.

home equity loan

A mortgage on the borrower's principal residence, usually for the purpose of making home improvements or debt consolidation.

home inspection

A thorough review of the physical aspects and condition of a home by a professional home inspector. This inspection should be completed prior to closing so that any repairs or changes can be completed before the home is sold.

homeowners insurance

A form of insurance that protects the insured property against loss from theft, liability and most common disasters.

Housing and Urban Development (HUD)

The U.S. government agency that administers FHA, GNMA and other housing programs.

housing affordability index

Indicates what proportion of homebuyers can afford to buy an average-priced home in specified areas. The most well known housing affordability index is published by the National Association of Realtors.

housing expenses-to-income ratio

See: debt-to-income ratio.


See: Housing and Urban Development.


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A method used by real estate appraisers to predict a property's anticipated future income. Income property includes shopping centers, hotels, motels, restaurants, apartment buildings, office space and so forth.

income-to-debt ratio

See: debt-to-income ratio.


A published interest rate compiled from other indicators such as U.S. Treasury bills or the monthly average interest rate on loans closed by savings and loan organizations. Mortgage lenders use the index figure to establish rates on adjustable rate mortgages (ARMs).


As a part of PITI, the amount of the monthly mortgage payment that does not include the principal, interest, and taxes.

Also see: homeowners insurance.


The amount of the entire mortgage loan which does not include the principal.  Also, as a part of PITI, the amount of the monthly mortgage payment which does not include the principal, taxes, and insurance.

interest cap

See: cap

interest rate

The simple interest rate, stated as a percentage, charged by a lender on the principal amount of borrowed money. See also: Annual Percentage Rate.


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See: tenancy.

jumbo loan

A nonconforming loan that is larger than the limits set by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) guidelines.


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Real estate deemed highly valuable because of its location.



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A claim against a property for the payment of a debt. A mortgage is a lien; other types of liens a property might have include a tax lien for overdue taxes or a mechanics lien for unpaid debt to a subcontractor.

life-of-loan cap

See: cap.


The capability of an asset to be readily converted into cash.

loan discount

See: points.

loan origination fee

See: origination fee.

loan-to-value ratio (LTV)

The relationship, expressed as a percentage, between the amount of the proposed loan and a property's appraised value. For example, a $75,000 loan on a property appraised at $100,000 is a 75% loan-to-value.


The guarantee of a specific interest rate and/or points for a specific period of time. Some lenders will charge a fee for locking in an interest rate. 


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The cost of the upkeep of the house. These costs may be minor in cost and nature (replacing washers in the faucets) or major in cost and nature (new heating system or a new roof) and can apply to either the interior or exterior of the house.


The amount a lender adds to the index of an adjustable rate mortgage to establish an adjusted interest rate. For example, a margin of 1.50 added to a 7 percent index establishes an adjusted interest rate of 8.50 percent.

market value

The price a property can realistically sell for, based upon comparable selling prices of other properties in the same area.


A change in the terms of the mortgage note, such as a reduction in the interest rate or change in maturity date.


A legal instrument in which property serves as security for the repayment of a loan. In some states, a deed of trust is used rather than a mortgage.

mortgage banker

A lender that originates, closes, services and sells mortgage loans to the secondary market.

mortgage broker

An intermediary between a borrower and a lender. A broker's expertise is to help borrowers find financing that they might not otherwise find themselves.

mortgage insurance

Money paid to insure the lender against loss due to foreclosure or loan default. Mortgage insurance is required on conventional loans with less than a 20 percent down payment. FHA mortgage insurance requires a payment of 1.5 percent of the loan amount to be paid at closing, as well as an annual fee of 0.5 percent of the loan amount added to each monthly payment.

mortgage interest

Interest rate charge for borrowing the money for the mortgage. It is a used to calculate the interest payment on the mortgage each month.

mortgage term

The length of time that a mortgage is scheduled to exist. Example: a 30-year mortgage term is for 30 years.


The lender.


The borrower.


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negative amortization

A situation in which a borrower is paying less interest than what is actually being charged for a mortgage loan. The unpaid interest is added to the loan's principal. The borrower may end up owing more than the original amount of the mortgage.

non-assumption clause

In a mortgage contract, a statement that prohibits a new buyer from assuming a mortgage loan without the approval of the lender.

non-conforming loan

A loan that does not conform to Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) guidelines. Jumbo loans are nonconforming.

See also: conforming loan.


A signed document that acknowledges a debt and shows the borrower is obligated to pay it.


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A mortgage allowing the borrower to receive advances of principal from the lender during the life of the loan. See also: closed-end mortgage.

origination fee

The amount charged by a lender to originate and close a mortgage loan. Origination fees are usually expressed in points.


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See: cap.


Abbreviation for principal and interest.


Abbreviation for principal, interest, taxes and insurance.


Charges levied by the lender based on the loan amount. Each point equals one percent of the loan amount; for example, two points on a $100,000 mortgage is $2,000. Discount points are used to buy down the interest rate. Points can also include a loan origination fee, which is usually one point.


Tentative establishment of a borrower's qualification for a mortgage loan amount of a specific range, based on the borrower's assets, debts, and income.

prime rate

The interest rate commercial banks charge their most creditworthy customers.


The amount of the entire mortgage loan, not counting interest.  Also, as a part of PITI, the amount of the monthly mortgage payment which does not include the interest, insurance, and taxes.

private mortgage insurance (PMI)

See: mortgage insurance.

property appraisal

See: appraisal.

property tax

The amount which the state and/or locality assesses as a tax on a piece of property.


To proportionally divide amounts owed by the buyer and the seller at closing.


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As determined by a lender, the ability of the borrower to repay a mortgage loan based on the borrower's credit history, employment history, assets, debts and income.


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See: cap.


Abbreviation for the Real Estate Settlement Procedures Act, which allows consumers to review settlement costs at application and once again prior to closing.

reverse annuity mortgage

A type of mortgage loan in which the lender makes periodic payments to the borrower. The borrower's equity in the home is used as security for the loan.


Rural Housing and Community Service

right of first refusal

Purchasing a property under conditions and terms made by another buyer and accepted by the seller.

right of rescission

When a borrower's principal dwelling is going to secure a loan, the borrower has three business days following signing of the loan documents to rescind or cancel the transaction. Any and all money paid by the borrower must be refunded upon rescission. The right to rescind does not apply to loans to purchase real estate or to refinance a loan under the same terms and conditions where no additional funds will be added to the existing loan.


At the end of the construction loan period, the borrower's file is delivered to Bank One Mortgage Loan Servicing Dept. Prior to delivery, CLD contacts the borrower and obtains funds for the tax and insurance escrows, a final title policy and homeowner's policy. This process is called a rollover.

Rural Housing and Community Development Service

A federal agency that administers mortgage loans for buyers in rural areas.


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second mortgage

A loan that is junior to a primary or first mortgage and often has a higher interest rate and a shorter term.

secondary market

A market comprising investors like GNMA, FHLMC and FNMA, which buy large numbers of mortgages from the primary lenders and sell them to other investors.


The responsibility of collecting monthly mortgage payments and properly crediting them to the principal, taxes and insurance, as well as keeping the borrower informed of any changes in the status of the loan.

settlement costs

See: closing costs.


A physical measurement of property done by a registered professional showing the dimensions and location of any buildings as well as easements, rights of way, roads, etc.


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A written document conveying title to property repossessed by the government due to default on tax payments.

tax savings

The amount of money that the homeowner is not required to pay the government in taxes because he or she owns a home.


As a part of PITI, the amount of the monthly mortgage payment which does not include the principal, interest, and insurance.

  • joint tenancy - equal ownership of property by two or more parties, each with the right of survivorship.

  • tenancy by the entireties - ownership of property only between husband and wife in which neither can sell without the consent of the other and the property is owned by the survivor in the event of death of either party.

  • tenancy in common - equal ownership of property by two or more parties without the right of survivorship.

  • tenancy in severalty - ownership of property by one legal entity or a sole party.

  • tenancy at will - a license to use or occupy a property at the will of the owner.


A formal document establishing ownership of property.

title insurance

A policy issued by a title insurance company insuring the purchaser against any errors in the title search. The cost of title insurance may be paid for by the buyer, the seller or both.

trust deed

See: deed of trust

Truth In Lending Act

The Truth In Lending Act requires lenders to disclose the Annual Percentage Rate and other associated costs to homebuyers within three working days of the loan application.


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A professional who approves or denies a loan to a potential homebuyer based on the homebuyer's credit history, employment history, assets, debts and other factors such as loan guidelines.

Uniform Settlement Statement

A standard document prescribed by the Real Estate Settlement Procedures Act containing information for closing which must be supplied to both buyer and seller.

utility costs

Periodic housing costs for water, electricity, natural gas, heating oil, etc.


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See: Veterans Administration.

vacation home

See: secondary residence.

variable rate mortgage (VRM)

See: adjustable rate mortgage.

Veterans Administration (VA)

The federal agency responsible for the VA loan guarantee program as well as other services for eligible veterans. In general, qualified veterans can apply for home loans with no down payment and a funding fee of 1 percent of the loan amount.


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An inspection of a property by the prospective buyer prior to closing on a mortgage.

warranty deed

A document protecting a homebuyer against any and all claims to the property.


The rate of earnings from an investment.


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The ability of local governments to specify the use of private property in order to control development within designated areas of land. For example, some areas of a neighborhood may be designated only for residential use and others for commercial use such as stores, gas stations, etc.


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GLOSSARY of Commercial Real Estate Terms


Karlhaus Realty™ has assembled this list of terms to assist you in your understanding of industry terms and concepts.

To add a term or ask a question, please

A  B  C  D  E  F  G  H  I  J  L  M
N  O  P  Q  R  S  T  U  V  W  Z



In actual contact with another object (i.e., attached). Same as "Contiguous".


An individual/entity who transacts, represents, or manages business for another individual/entity. Permission is provided by the individual/entity being represented.


Individual to whom a contract is assigned.


The manner by which a contract is transferred from one individual to another individual.


An individual who transfers a contract to another individual.

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Build Out

The construction or improvements of the interior of a space, including flooring,walls, finished plumbing, electrical work, etc.

Building Permit

Written government permission to develop, renovate, or repair a building.

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Cancellation Clause

A provision in a contract (e.g., lease) that confers the ability of one in the lease to terminate the party's obligations. The grounds and ability to cancel are usually specified in the lease.

Capital Improvement

Any major physical development or redevelopment to a property that extends the life of the property. Examples include upgrading the elevators, replacement of the roof, and renovations of the lobby.

Certificate of Occupancy (CO)

The government issues this official form, which states that the building is legally ready to be occupied.


Household goods, including personal property such as lamps, desks, and chairs.


The preeminent real estate Internet site that provides prospective tenants with commercial space availabilities.

Common Area Maintenance (CAM)

This is the amount of additional rent charged to the tenant, in addition to the base rent, to maintain the common areas of the property shared by the tenants and from which all tenants benefit. Examples include: snow removal, outdoor lighting, parking lot sweeping, insurance, property taxes, etc. Most often, this does not include any capital improvements that are made to the property.


Touching at some point or along a boundary.


A requirement in a contract that must occur before that contract can be finalized.


A legal agreement between entities that requires each to conduct (or refrain from conducting) certain activities. This document provides each party with a right that is enforceable under our judicial system.


Wording found in deeds that limits/restricts the use to which a property may be put (e.g., no bars).

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A signed, written instrument that conveys title to real property.

Deed Restriction

An imposed restriction in a deed that limits the use of the property. For example, a restriction could prohibit the sale of alcoholic beverages.


Failure to fulfill a promise, discharge an obligation, or perform certain acts.


Transfer something from one entity to another.

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Action to regain possession or real property. This is a last-ditch effort that is used when there is no relationship between landlord and tenant.

Eminent Domain

The government's right to condemn and acquire property for public use. The government must provide the owner fair compensation.


Signing one's name on the back of a check.


A written agreement among parties, requiring that certain property/funds be placed with a third party. The object in escrow is released to a designated entity upon completion of some specific occurrence.

Estoppel Certificate

A legal instrument executed by the one taking out the mortgage (i.e., mortgagor). The owner of a property may require an individual leasing a property to sign an estoppel certificate, which verifies the major points (e.g., base rent, lease commencement and expiration) existing lease between the landlord and tenant.

Eviction (Actual)

Physical removal of a tenant either by law or force.

Eviction (Constructive)

The landlord or his agents disturb the tenant, rendering the leased space unfit for the tenant's previous use.

Eviction (Proceeding)

A legal proceeding by the landlord to remove a tenant.

Exclusive Agency

An agreement in which one broker has exclusive rights to represent the owner or tenant. If another broker is used, both the original and actual broker are entitled to leasing commissions.

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A person who represents another on financial/property matters.


Personal property so attached the land or building (e.g., improvements) it is considered part of the real property.

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Grace Period

Additional time allowed to complete an action (e.g., make a payment) before a default or violation occurs.

Gross Lease

A lease of property whereby the landlord (i.e., lessor) pays for all property charges usually included in ownership. These charges can include utilities, taxes, and maintenance, among others.

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Holdover Tenant

A tenant who remains in possession of leased property after the lease term expiration.

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An individual who is unable to handle his own affairs by reason of some medical condition (e.g., insanity, Alzheimer's).


A written legal document created to secure the rights of the parties participating in the agreement.


Incapable of being altered, changed, or recalled.

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Joint Tenancy

Ownership of real property by two or more individuals, each of whom has an undivided interest with the right of survivorship.


A formal decision issued by a court relating to the specific claims and rights of the parties to an act or suit.

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One who rents property to a tenant.


A contract whereby the landlord grants the tenant the right to occupy defined space for a set period at a specific price (i.e., rent).


The estate or interest a tenant has as stated in the tenant's lease.


An individual (i.e., tenant) to whom property is rented under a lease.


An individual (i.e. landlord) who rents property to a tenant via a lease.

Letter of Intent

An informal, usually non-binding, agreement among parties indicating their serious desire to move forward with negotiations.


An employment contract between principal and agent that authorizes the agent (such as a broker) to perform services for the principal and his property.

Loss Factor

What percentage of the gross area of a space is lost due to walls, elevator, etc. Rule of thumb in Manhattan is approximately 15%.

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A requirement that must be conformed to as specified in any written document.

Market Price

The actual selling or leasing price of a property.

Market Value

The expected price that a property should bring if exposed for lease in the open market for a reasonable period of time and with market savvy landlords and tenants.

Meeting of the Minds

When all individuals to a contract agree to the substance and terms of that contract.


A person under a legal age, usually under 18 years old.

Multiple Listing

An arrangement among Real Estate Board of Exchange Members, whereby each broker presents the broker's listings to the attention of the other members so that if a lease results, the commission is divided between the broker bringing the listing and the broker making the lease.

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Net Lease

Also called triple net lease. The lessee pays not only a fixed rental charge but also expenses on the rented property, including maintenance.

Non-Disturbance Agreement

The tenant signs this to prevent himself from being evicted if the property owner does not pay its mortgage to the bank.

Notary Public

A public officer who is authorized to witness and verify certain documents (e.g., contracts, deeds, mortgages). Also, an affidavit may be sworn before this public officer.

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The person who will receive the outcome of an obligation.


An individual who has engaged to perform an obligation to another person (i.e., obligee).

Open Listing

A listing given to any broker without liability to compensate any broker except the one who first secures a buyer who is ready, willing, and able to meet the terms of the listing, or secures the acceptance by the landlord of a satisfactory offer; the lease of the property automatically terminates the listing.


A right given to purchase or lease a property upon specified terms within a specified time. If the right is not exercised, the option holder is not subject to liability for damages. If the holder of the option exercises it, the grantor of option must perform the option's requirements.

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Percentage Lease

A lease of property in which the rent is based upon the percentage of the sales volume made on the specific premises. There is usually a clause for a minimum rent as well.

Personal Property

Any property which is not real property. Examples include furniture, clothing, and artwork.

Power of Attorney

A written instrument duly signed and executed by an individual which authorizes an agent to act on his behalf to the extent indicated in the document.


The employer (e.g., landlord) of an agent or broker. This is the agent's or broker's client.

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Quiet Enjoyment

The right of an landlord or tenant to use the property without disturbances.

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Real Estate Board

An organization whose members consist primarily of real estate professionals such as brokers.

Real Estate Syndicate

When partners (either with or without unlimited liability) form a partnership to participate in a real estate venture.

Real Property

Land and any capital improvements (e.g., buildings) erected on the property.


A coined word which may only be used by an active member of a local real estate board, affiliated with the National Association of Real Estate Boards.


Compensation from tenant to landlord for the use of real estate.


A restriction, often specified in the deed, on the use of property.


An act of rescinding power previously authorized.

Rule of Thumb

A common or ubiquitous benchmark. For example, it is often assumed that each worker in an office will need approximately 250 square feet of space.

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The location of a property.

Specific Performance

When a court requires a defendant to carry out the terms of an agreement or contract.

Square Feet

The usual method by which rental space is defined. It is the area of that space, calculated by taking length times width. For example, a room 30 feet by 60 feet has an area of 1,800 square feet.


A law established by an act of a legislature.

Statute of Frauds

State law (founded on ancient English law) which requires that contracts must be reduced to written form if it is to be enforced by law.

Statute of Limitations

A law barring all right of redress after a certain period of time from the moment when a cause of action first arises.


An agent of an individual already acting as an agent of a principal.


The leasing of space from one tenant to another tenant.

Subscribing Witness

The witness to the execution of an instrument who has written his name as proof of seeing such execution.


The cancellation of a lease by mutual consent of the tenant and the landlord.

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Tenancy at Will

A license to occupy or use lands and buildings at the will of the landlord.

Tenancy by the Entirety

An estate which exists only between husband and wife. Each has equal right of enjoyment and possession during their joint lives, and each has the right of survivorship.

Tenant Improvements

Work done on the interior of a space, can be paid for by landlord, tenant, or some combination of both, depending on the terms of the lease.

Tenancy in Common

Ownership of property by two or more individuals, each of whom has an undivided interest, without the right of survivorship.

Tenants at Sufferance

An individual who comes to possess land via lawful title and keeps it in perpetuity without any title.

Tie-in Arrangement

A contract where one transaction depends upon another transaction.


A wrongful act or violation of a legal right for which a civil action will lie.

Triple Net Lease

A lease requiring tenants to pay all utilities, insurance, taxes, and maintenance costs.

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Urban Property

Property in a city or a high-density area.

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A binding situation that is authorized and enforceable by law.


Estimated price, value, or worth. Also, the act of identifying a property's worth via an appraisal.


Government authorization to use or develop a property in a manner which is not permitted by the applicable zoning regulations.


Act, condition, or deed that violates the permissible use of property.


Something that is unenforceable.


A situation which is capable of being unenforceable but is not so unless direct action is taken.

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The intentional relinquishment or abandonment of a specific claim, privilege, or right.

Work Letter

An amount of money that a landlord agrees to spend on the construction of the interior of a space per the lease, usually negotiated.

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An area, delineated by a governmental authority, which is authorized for and limited to specific uses.

Zoning Ordinance

A law by a local governmental authority (e.g., city or county) that sets the parameters for which the property may be put to use.

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