loan-to-value ratio

Definition

The percentage of a property's value that's borrowed, calculated by dividing loan amount by appraised value or purchase price. The number that determines whether lenders think you're responsible or reckless.

Example Usage

With a 95% loan-to-value ratio, they required private mortgage insurance because we had barely any skin in the game.

Origin

Banking risk assessment terminology from early 20th century lending practices

Fun Fact

The magic 80% LTV threshold determines PMI requirements, making a 20% down payment the golden standard that saves borrowers hundreds monthly.

Source: Federal Housing Finance Agency lending standards

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contingencies

The 'what if' scenarios that keep project managers up at night and pad contracts with extra zeros. In real estate, these are the escape clauses buyers insert into offers like 'contingent on inspection' or 'contingent on not discovering the basement is haunted.' Essentially, it's the professional way of saying 'but only if everything goes according to plan,' which it never does.

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ad valorem tax

A property tax based on the assessed value of real estate, meaning the more your property is worth, the more you pay. Latin for 'according to value,' or as homeowners call it, 'penalty for improvement.'

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eminent domain

The government's constitutional power to seize private property for public use with compensation. Democracy's way of saying 'we love your land more than you do, here's some money, goodbye.'

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phantom rent

The theoretical rental income from a vacant unit that's factored into pro forma projections but not actually being collected. It's the imaginary money that makes cap rates look better on paper than they are in reality.

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