Modelling Reverse Mortgages
A framework for analyzing reverse mortgages in a fixed interest rate environment as well as a variable interest rate environment is suggested. To analyze the risk and potential profit of a reverse mortgage, a proposal is made to calculate the expected present value of profit and the probability of l...
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| Format: | text |
| Language: | English |
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Institutional Knowledge at Singapore Management University
1995
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| Subjects: | |
| Online Access: | https://ink.library.smu.edu.sg/soe_research/215 |
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| Institution: | Singapore Management University |
| Language: | English |
| Summary: | A framework for analyzing reverse mortgages in a fixed interest rate environment as well as a variable interest rate environment is suggested. To analyze the risk and potential profit of a reverse mortgage, a proposal is made to calculate the expected present value of profit and the probability of loss as indicators of the viability of the loan. Using Singapore data, some estimates of these quantities for various levels of annuity payment under different circumstances are provided. |
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