A mortgage loan is a loan which is secured by the collateral of a specified real estate property. The real estate pledged with a mortgage can be dived into two categories: residential and non-residential. Mortgage securities represent an ownership interest in mortgage loans made by financial institutions, for example, commercial banks or mortgage companies to finance the borrower's purchase of a home or real estate. As the underlying mortgage loans are paid off by the homeowners, the investors receive payments of interest and principal. Residential properties include houses, condominiums, cooperatives, and apartments. Non-residential properties include commercial and farm properties. The majority of mortgage securities are issued by an agency of the U.S. government i.e. Ginnie Mae, or by government-sponsored enterprises i.e. Fannie Mae and Freddie Mac.
Mortgage securities are often priced at a higher yield than US Treasury and corporate bonds. These securities may be sold at par, or at a premium or a discount to their face value. Their prices fluctuate in response to changing interest rates: when interest rates fall, prices rise, and vice verse.
Thursday, January 1, 2009
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The risk of loss in the trading of any securities products can be substantial. The strategies employed here are active trading strategies therefore you should carefully consider whether such trading is suitable for you in light of your personal investment objectives and financial resources. All data and information provided on this site is for informational purposes only. "yourmoneyandyourworld.blogspot.com" makes no representations as to accuracy, completeness, be current, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis. The comments and posts here are personal opinions. There are NOT a recommendation to buy or sell any securities or NOT a recommendation for any actions for you in your 401K/IRAs/any retirement accounts/your personal properties. Please consult your advisor, conduct your own research and suitability, and invest at your own risk.
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