Re: ppt on banking sector
What is reverse mortgage in banking terminology?
A reverse mortgage is a mortgage in which the borrower is making monthly payments that are smaller than the interest on the loan. So instead of the principal balance decreasing over time, it is increasing. When the borrower dies, the house is sold and the mortgage company gets the higher principal balance.
Reverse mortgages are typically sold to older people who have equity in the house that they can pull out in cash. They may want to use money from their equity while they are still alive instead of leaving a lot of equity in the house when they die.