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Alternative Mortgage Instruments

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Alternative mortgage instruments
Variations of mortgage instruments such as adjustable-rate and variable-rate mortgages, graduated-payment mortgages, reverse-annuity mortgages, and several seldom-used variations.

Alternative Mortgage Instrument
Any mortgage loan other than a fixed rate, amortized, conventional mortgage. Examples include adjustable-rate mortgages and hybrid mortgages. They are most popular when interest rates are high and more people cannot afford a regular mortgage, or when a larger number of people are buying investment property. The proliferation of alternative mortgage instruments has been cited as a contributing factor in causing the 2008 economic crisis.


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The use of alternative mortgage instruments further stimulated the adoption of technology in mortgage servicing.
Notably, interest rate changes influence the timing of foreclosure on fixed-rate mortgages, but not on alternative mortgage instruments such as ARM loans.
 
 
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