FEATURED POST

HOW TO GET MORTGAGE LOAN EASILY

Image
  Getting a mortgage loan can be a lengthy and sometimes challenging process, but there are some steps you can take to increase your chances of getting approved.   copyright free image by  pixabay Check Your Credit Score: Your credit score is one of the most important factors that lenders consider when deciding whether or not to approve your mortgage loan application. You can check your credit score for free from many websites like Credit Karma, Credit Sesame, or directly from the three credit bureaus. If your credit score is low, consider improving it by paying off debts and correcting any errors. Save for a Down Payment: Saving for a down payment can help you get approved for a mortgage loan and also lower your monthly payments. Most lenders require a down payment of 20% of the home’s purchase price, but some may accept as low as 3%. However, be aware that if you put down less than 20%, you may be required to pay Private Mortgage Insurance (PMI). Get Pre-Approved: Getti...
Post a Comment

MORTGAGE BACKED SECURITY

 A mortgage-backed security (MBS) is a type of investment vehicle that is backed by a pool of mortgages. The mortgages in the pool are typically originated by banks or other lenders, and then sold to a government-sponsored enterprise (GSE) such as Fannie Mae or Freddie Mac, which securitizes the mortgages into MBSs.

  copyright free image by pixabay


When an investor purchases an MBS, they are essentially buying a share of the pool of mortgages, and the cash flows from the mortgages are used to pay the investor. The cash flows consist of principal and interest payments from the homeowners who are paying off their mortgages.

MBSs are attractive to investors because they offer a relatively high yield compared to other fixed-income securities, such as Treasury bonds. However, MBSs are also subject to prepayment risk, which occurs when homeowners pay off their mortgages early. This can reduce the cash flows to the MBS investors and may lead to lower returns.

MBSs played a significant role in the 2008 financial crisis, as many subprime mortgages were securitized into MBSs, and the default and foreclosure rates on these mortgages soared. This led to significant losses for investors in MBSs and contributed to the overall instability of the financial system.

Comments

Post a Comment

Popular posts from this blog

ADVATAGES OF MORTAGE LOAN

Image
  There are several advantages to obtaining a mortgage loan for purchasing a home or refinancing an existing mortgage, including:   copyright free image by  pixabay Access to home ownership: For many people, obtaining a mortgage loan is the only way to purchase a home, as it can be difficult to save up enough money to pay for a home in cash. A mortgage loan provides access to home ownership, which can be a source of pride and stability. Lower interest rates: Mortgage loans typically offer lower interest rates compared to other forms of debt, such as credit cards or personal loans. This can help borrowers save money on interest charges over the life of the loan. Tax benefits: Mortgage interest is tax-deductible, which can help borrowers reduce their taxable income and save money on taxes. Build equity: Over time, as the borrower pays down the mortgage loan, they build equity in their home. This equity can be used to finance home improvements, pay off debt, or provide a sou...
Read more

DISADVANTAGES OF MORTGAGE LOANS

Image
  While mortgage loans can provide many benefits to borrowers, there are also some potential disadvantages to consider, including:   copyright free image by  pixabay Debt burden: A mortgage loan represents a significant amount of debt, which can be a burden on the borrower's finances. The monthly mortgage payment, property taxes, and insurance can be a significant portion of the borrower's budget. Risk of foreclosure: If the borrower is unable to make their mortgage payments, they risk losing their home to foreclosure. This can have long-lasting consequences on the borrower's credit and financial stability. Closing costs: Mortgage loans come with a variety of closing costs, which can add up to thousands of dollars. These costs include origination fees, appraisal fees, title insurance, and more. Interest costs: While mortgage interest rates are generally lower than other types of debt, the total amount of interest paid over the life of the loan can still be substantial. Th...
Read more

HOW TO SEARCH BEST MORTGAGE LOAN PROVIDERS IN USA

Image
  Finding the best mortgage loan provider in the USA requires research, comparison, and careful consideration of various factors. Here are some steps you can take to search for the best mortgage loan providers in the USA:   copyright free image by  pixabay Determine your needs and preferences: Before searching for mortgage loan providers, you need to determine your needs and preferences. Consider factors such as your credit score, the type of loan you need, the interest rate you can afford, and the loan amount you require. Do your research: Use online resources to research different mortgage loan providers in the USA. Check out the websites of different providers, read reviews from customers, and research their loan products and services. Compare lenders: After conducting your research, narrow down your list of potential lenders and compare them. Look at their interest rates, fees, loan terms, and customer service. Check for pre-approval: Many mortgage loan providers offe...
Read more