Alternative Mortgage Instrument
A broad category of mortgages that vary from fixed-rate, fully amortizing mortgages in terms of amortization schedules, interest rate structure and payment options. These mortgages often make it easier for individuals to purchase real estate by reducing monthly payment amounts and increasing the amount the borrowers are able to finance. Investopedia Says:
Adjustable-rate mortgages, adjustable-rate mortgages with initial fixed interest rates, mortgages with temporary buydowns and mortgages with negative amortization features all fall under the alternative mortgage instrument category. Alternative mortgage instruments are popular in high-cost areas. Because most alternative mortgage instruments are indexed to short-term interest rates, they also thrive during economic conditions under which short-term interest rates are meaningfully lower than long-term interest rates. Related Terms:
Adjustable-Rate Mortgage - ARM
Amortization Schedule
Graduated Payment Mortgage
Interest-Only Mortgage
Negative Amortization
Payment Option ARM |