When purchasing, you must decide between government-backed or private-label securities:
: These are issued or guaranteed by government agencies like Ginnie Mae or government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac.
Buying mortgage-backed securities (MBS) involves choosing between direct ownership or indirect investment through funds. These securities are essentially pools of home loans bundled together, allowing you to earn income from the monthly principal and interest payments made by homeowners. Ways to Buy Mortgage-Backed Securities
: More complex MBS products are often split into "tranches" with different maturities and risk profiles, allowing you to pick a slice that matches your risk tolerance. Key Risks to Consider Before buying, evaluate these specific fixed-income risks: