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  • Writer's pictureMac Tumacay

Investing in Real Estate through Mortgage-Backed Securities (MBS)

Investing in real estate can be a great way to diversify your portfolio and potentially earn passive income. One way to invest in real estate is through mortgage-backed securities (MBS).

MBS are financial instruments that are backed by a pool of mortgages. They are created when a lender or group of lenders bundle together a group of mortgages and sell them to investors. The cash flows from the underlying mortgages are used to make payments to the holders of the mortgage-backed securities.

Investing in MBS provides investors with a way to earn returns from the mortgage payments made by borrowers. MBS can be a good investment for those who are looking for a way to diversify their portfolio and earn income from real estate, but they do carry some risk. Interest rates and the performance of the underlying mortgages can affect the value of MBS.

To invest in MBS, you can purchase them through a brokerage account or through a fund that specializes in MBS. It's important to do your due diligence and research the specifics of the MBS you are considering investing in, such as the types of mortgages that are included in the pool and the creditworthiness of the borrowers.

MBS can be a useful tool for investors looking to add real estate exposure to their portfolio. However, it's important to understand the risks and do your research before making any investment decisions.

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