The Government National Mortgage Association — Ginnie Mae — purchases home loans from various lenders. After amassing these mortgages, Ginnie Mae pools them with other loans and sells shares in these mortgage-backed securities. Ginnie Mae guarantees both principal and interest to the investors of mortgage-backed securities. Buy Ginnie Mae mortgage bonds from a reputable broker to take advantage of the guaranteed return on investment and competitive interest rate.
1. Open a brokerage account with an investment broker. Provide personal information, Social Security number and bank account information as you open the account.
2. Fund your brokerage account with enough money to finance the purchase of the mortgage bonds. The minimum investment for a mortgage bond is usually $25,000.
3. Speak with a brokerage firm representative in the bond department. Initiate the purchase and complete all paperwork connected with the acquisition. Generally, the income earned from the investment will deposit into your brokerage account each month.
4. Retain copies of the mortgage bond purchase and all records of interest earned from the investment for income tax reporting.
- The main risk associated with mortgage-back securities is the possibility that mortgage-holders will prepay their loans if interest rates fall because of refinancing. If mortgage-holders prepay their loans, the length of the mortgage-backed securities will become shorter.
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