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Alternative mortgage instruments (ATI) are mortgage plans differing from standard or conventional mortgages. ATI is different from conventional fixed rate, fixed term, fixed monthly payment and fully amortized mortgage. Usually ATI is a loan with real property as collateral. ATI’s are mortgages with variable interest rate and interest-only loans. Most of the ATIs are residential mortgage loans. ATI provides more affordable housing market for middle-class home buyers.
Banks and savings institutions has introduced a variety of alternative mortgages to attract first time home owners who find it difficult to purchase home due to the high interest rate. The purpose is to reduce home buyer's mortgage payment. For example, in an adjustable rate mortgage, there is a fixed rate of interest in the first three to ten years of the loan.