Government National Mortgage Association
  • A government national mortgage association mutual fund is a secure and stable investment
  • Investing in a national mortgage mutual fund means a secure investment backed by the government
  • The government national mortgage association is also called Ginnie Mae, and is not a publicly traded company

What is a government national mortgage association mutual fund, and what do these funds offer investors? To understand these questions you must understand what the government national mortgage association is and what this agency does. This national mortgage association is also called Ginnie Mae, and it is a corporation of the United States government that is a section of the U.S. Department of Housing and Urban Development, which is also called HUD. This government entity guarantees liquidity for mortgages insured by the government. This includes mortgages that are insured by all government agencies, and this includes the Rural Housing Administration, better known as the RHA, the Federal Housing Administration, also called the FHA, and the VA, also known as the Veterans Administration. The national mortgage association also helps to increase the amount of investor capital that is available to make mortgage loans by the issuing entities. Mortgage backed securities that Ginnie May secures are normally ones which are FHA assured, which means that the Federal Housing Administration guarantees these securities. These mortgages are generally given to low income or first time home buyers.

The government national mortgage association only insures that the interest and principal payments are made on time by the approved mortgage issuers. These issuers are normally banks, mortgage companies, and other lenders who issue loans that qualify. This association is not publicly traded, unlike the Fannie Mae or Freddie Mac programs. Investors in mutual funds that use the pooled capital to invest in government national mortgage association securities do not know which mortgage lenders they are investing in. What they do know is that the security has the full backing of the United States Government and is insured against default. This makes investing in national mortgage association mutual funds very safe and stable. There is very little chance of losing investment capital with these funds because they are guaranteed.

Mutual funds pool together the capital from a number of investors. This allows for larger trades and lower expenses. Choosing no load funds is the best possible choice if you are comfortable making your own investment decisions, because these funds do not charge load fees. Load fees are comparable to sales commissions, and they are paid in exchange for investment advice concerning the right mutual funds for your investment goals. The problem is that load fees are expensive and do not necessarily help you make better investment choices. These fees can be as high as eight percent or more, and they can be charged at the front or back end of the trade, or sometimes even both. Choosing load government national mortgage association mutual funds does not mean that you will have access to better funds, or that the funds are even the best fit for your goals. Some brokers and financial advisors may receive a fee or bonus from some mutual funds for directing new investors to the fund. This can result in being given investment advice based on the broker’s best financial interests, instead of your best investment interests.

Mutual funds that are backed by the assurance of the government may not have yields as high as some other investing methods, like stocks or junk bonds, but these funds are more conservative so that the risks involved are also much lower. These funds are a great choice for capital that you can not take large risks with, such as retirement funds, so that when the money is needed it is still there and has not been lost on volatile market swings. Government national mortgage association mutual funds may not be right for every investor, but they are an ideal fit for a large number of them. Do all the research and ensure that the mutual fund you choose meets all of your criteria.