Kaplan Real Estate Education - LEARN Math Vocabulary

Vocabulary practice flashcards generated from Kaplan LEARN Math lecture materials covering fundamental real estate math terminology and formulas.

Math Circle Formula

A visual formula arrangement, also known as the T-Bar formula, where top value $C$ equals bottom values $A \times B$, leading to $C \text{ ÷ } A = B$ and $C \text{ ÷ } B = A$.

Loan-to-Value (LTV) Ratio

Also called the mortgage ratio, it reflects the maximum amount of money a lender will loan on a property, calculated as $\text{LTV} \times \text{Home Value} = \text{Max Loan Amount}$.

Equity

The difference between the market value of a property and the debt owed on it, ignoring closing costs and sales expenses.

Seller's Net Proceeds

A calculation provided to a seller prior to responding to an offer, showing the estimated net funds they will receive at the close of escrow after subtracting anticipated closing costs.

Discount Points

Fees paid to a lender at closing, where one point costs $1\text{ percent}$ of the loan amount, charged to increase lender yield and lower the loan nominal interest rate by $\frac{1}{8}\text{ percent}$ ($0.125\text{ per cent}$) per point.

Loan Origination Fee

A fee charged by a lender to process and issue a loan, structured as a fixed dollar amount or percentage of the loan, which does not impact the interest rate.

Transfer Tax

A one-time fee charged in many states when a deed is recorded, based on the property sales price and calculated as a specific rate per every $100$, $500$, or $1,000$ of sale price.

Capitalization Rate

Also called the cap rate, it reflects an investor's desired return ON investment (profitability) and return OF investment, used to calculate income property value using $\text{NOI} \text{ ÷ } \text{Cap Rate} = \text{Value}$.

Loan Factor

A number representing the monthly Principal and Interest payment for each $1,000$ borrowed for a stated interest rate over a specified loan term.

PITI

An acronym for Principal, Interest, Taxes, and Insurance, representing the total monthly borrower payment required by certain mortgage loans.

30/360 Calendar

A standard proration calendar where each month is calculated as having $30$ days and the full year has $360$ days to streamline closing calculations.

Gross Rent Multiplier (GRM)

A ratio used to estimate property value based on gross monthly rent, calculated as $\text{Sales Price} \text{ ÷ } \text{Gross Monthly Rent} = \text{GRM}$.

Call of the Question

The core question that must be solved first when addressing word math problems, before selecting formulas or identifying missing data.