What is a mortgage investment and how do I get started?

I inherited a large amount of money and someone mentioned getting into mortgage investments. I don’t know a thing about them. I already have my Roth IRA and other mutual funds going so I want to try something new but I don’t want to get taken advantage of.

By | 2013-08-27T07:22:14+00:00 August 27th, 2013|Mortgages Home Loans Interest Rate|2 Comments

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  1. bcm_s19 August 27, 2013 at 8:36 AM - Reply

    Best advice, if you don’t understand what you are investing in, no matter how good of an investment it is for someone else, it is probably too risky for you.

    Mortgage Investing entails buying mortgage notes at a discount from holders of those notes. You get a decent return in the interim and sometimes a windfall when the note is refinanced early.

    Takes a lot of work chasing the leads down and you have not diversified your risk if you only own 1-2 notes. Involuntary investment in real estate(through foreclosure) is almost always a bad thing.

    Stick to things you understand or find people you have confidence in who understand those things.

  2. gosh137 August 27, 2013 at 7:41 AM - Reply

    If that someone means for you to personally buy mortgages, forgetaboutit, too much trouble to collect, let the pros handle it. Thornburg Mortgage Company (TMA) is (in my and others opinion) the best managed company in the mortgage business. Year after year, when others were reducing dividends due to reduced earnings, TMA was churning out 10% plus in dividends per year and seeing an increase in their stock price. Now I am getting 14.7% yield on my original investment. For a less risky investment, a mutual fund is the way to go. Vanguard GNMA Fund is among the best (again, in my opinion, and the opinion of many employees and customers of Vanguard). But just don’t take my word for it, do your own research.

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