Who owns your mortgage? For decades the question used to be straight forward, and the answer was usually a local bank. The bank made a profit by loaning out money and collecting interest. Bank loans used to be simple transactions, until deregulation and derivative trading changed the mortgage industry and depressed property values.

In this new environment, home owners need to be more cautious then ever before deciding to invest into a home. There are more factors involved in making a decision than just looking at the school district and the initial interest rate on the mortgage.

Under the old system of taking out a loan from a local bank, the bank only made money if the homeowner made payments. Derivative trading shifted the risk to other investors. Investment banks pooled large groups of mortgages and sold them. For banks it mattered less if the home owners could make mortgage payments then the instant profits that could be made by making trades.

This system also shifted more risk onto the home owner. An abundance of homes on the market causes less demand property, and gluts of foreclosed homes causes a decrease in neighborhood property values.

This system has made investing in a home more complex then ever. Rather than just looking as a house as a place to live, it must be viewed from the point of view of the banks. This is an investment that is part of a complex worldwide economy, and a home can not be counted on to raise in value as it once did.