Mortgage Backed Securities: Where The Money Comes FromBy Debbie Wilson
Loan Page Columnist
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When you apply for a mortgage, the company you make your monthly payment to rarely owns your loan. Rather, they are the "servicer" of your mortgage. But understanding how the refinancing process works can help you make better financial decisions. And this entails knowing more about mortgage-backed securities.
Mortgage InvestmentsMortgage backed securities are sold on Wall Street to institutions or individual investors. These securities usually earn a higher interest rate than treasury bonds and thus tend to be more popular. By selling the mortgage-backed securities, the institution is able to obtain new funds, which in turn allows them to buy more mortgage pools. And so the cycle continues from loan to loan just like this.
Refinancing OptionsNow that you are ready to refinance your home, do some research. Check out who will service your mortgage. You may notice that at times, your loan gets transferred to another company. That doesn't mean your loan was sold, however the right to service your loan was. What is more important is that you check out all your options, including interest rates, mortgage lenders, types of loans offered, and of course, lender reputations. You'll be glad you did!
About the Author
Debbie Wilson owns and operates a lakeside resort. Her previous experience includes profitability consulting for a national healthcare company. Debbie holds a B.A. in Business Management with a minor in Physical Education.
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