Exam vocabulary
Real Estate Math Glossary
8 Real Estate Math terms the exam expects you to know, in plain English.
- Annual Interest Rate
- The yearly cost of borrowing money expressed as a percentage of the loan principal.
- Capitalization Rate (Cap Rate)
- A rate of return on an income property calculated by dividing net operating income by property value.
- Commission
- The fee paid to a real estate brokerage for services, typically a percentage of the sale price.
- Equity
- The difference between a property's market value and the outstanding balance of any loans against it.
- Loan-to-Value Ratio (LTV)
- The ratio of the loan amount to the property's appraised value or price, whichever is lower.
- Principal
- The original amount of money borrowed in a loan, excluding interest.
- Proration
- Dividing ongoing expenses like taxes between buyer and seller based on each party's period of ownership.
- Seller Net Sheet
- An estimate of the proceeds a seller will receive after subtracting all closing costs and payoffs from the sale price.
Study the concepts behind these terms: Real Estate Math study guide
Freehold is an independent study resource and is not affiliated with, endorsed by, or sponsored by PSI, Pearson VUE, or any state real estate licensing board or commission. Freehold does not guarantee passage of any licensing exam.