Final answer:
The loan-to-value ratio of 90/10 indicates that Jillian's loan is 90% of the property value, and her down payment is the remaining 10%. This plays a significant role in home financing terms and the need for mortgage insurance.
Step-by-step explanation:
When Jillian has a loan-to-value ratio of 90/10, it signifies the percentage of the property value that is financed through a loan in comparison to the percentage paid by the down payment. In this scenario, we're examining two components: the loan amount and the down payment as percentages of the total property value.
The correct answer to the question is c) Jillian's loan is 90% of the property value. This means that Jillian has taken a loan that covers 90% of the property's total cost, while the remaining 10% is covered by her down payment. Therefore, if Jillian's property value was $100,000, her loan would amount to $90,000, and her down payment would be $10,000.
This concept is fundamental in understanding the dynamics of homeownership and mortgage lending. A lower down payment often means that a buyer must get mortgage insurance, which protects the lender in case the buyer defaults on the loan. This loan-to-value ratio is a critical factor in determining the terms of the mortgage, eligibility for certain loan programs, and the need for additional insurance.