Jillian has a loan-to-value ratio of 90/100. This means—

The Loan-to-Value (LTV) ratio is a financial metric used by lenders to assess the risk of a loan. It is calculated by dividing the mortgage amount by the appraised value or purchase price of the property, whichever is lower. A 90/100 LTV, or 90%, signifies that the loan covers 90% of the property's value. The remaining 10% represents the borrower's equity, which is typically paid as a down payment. A higher LTV ratio generally indicates a higher risk for the lender.

A. This option incorrectly reverses the percentages; the loan is 90% of the value, not 10%.

C. The LTV ratio concerns a loan from a financial institution, not funds from a personal retirement account.

D. This describes a property that is "underwater," where the loan exceeds the value, which is the inverse of the LTV calculation.

1. University of Maryland, Colvin Institute of Real Estate Development. REAL 660: Real Estate Finance and Investment. Course Syllabus and Lecture Notes. "Underwriting Fundamentals" section. The courseware defines Loan-to-Value (LTV) as the primary mortgage amount divided by the property's appraised value, with the remainder representing the borrower's equity or down payment.

2. Maryland Department of Labor. Maryland Real Estate Commission Salesperson Pre-Licensing Curriculum. Module 8: Financing the Real Estate Transaction, Section 8.2 "Loan-to-Value Ratios." The curriculum specifies that an LTV of 90% means the lender finances 90% of the home's value, requiring the buyer to provide a 10% down payment.

3. Ghent, A. C., & O'Sullivan, P. (2017). The value of a loan-to-value ratio. Journal of Real Estate Finance and Economics, 54(4), 474–500. The article's methodology is based on the standard definition of LTV as the ratio of the mortgage loan to the property's value at the time of origination. (https://doi.org/10.1007/s11146-016-9557-9)