What Are the Risks of Investing in Mortgages?

The primary pitfalls include an adjustable interest rate that applies only after the initial fixed period of a mortgage expires, making your returns variable, and the risk of exposure to an economic downturn which could depreciate the value of the property securing the mortgage.

Investors may also receive payments that fluctuate month-to-month depending on the percentage of principal and interest required for each payment. Investing in mortgages can therefore be an unpredictable source of income.