If interest rates rise to the point that the interest due cannot be covered by your monthly amortization mortgage payment, the unpaid amount will be added into the loan balance, increasing it over time. For instance, the payment cap of your amortization mortgage is 7.5%. With a monthly amortization mortgage payment of $1,000 and rising interest rates, your new payment would normally be $1200/month. Higher Interest Rates for Bad Credit Mortgage Loans It is only natural that high interest rates are charged for those borrowers who are on a bad credit mortgage loan. Handing out loans to borrowers with poor credit is a risky business and lenders want compensation for the risks they're taking. Bad Credit Mortgage Loan Limits But while rates are indeed high in bad credit mortgage loans, there are also limits to these. After seven years, the total amount of money you owe to the balloon payment mortgage lender is $184,000, provided that you haven't sold the property yet or refinanced. A tip for home borrowers is that when you do take on a balloon payment mortgage makes sure that the due date is not too soon. With balloon payment mortgages, if you can't pay the lender the amount on the due date, you might have to foreclose and lose the property. Most consumers are hesitant to get house loans where the rates fluctuate with the changing interest rates of the market. Fixed rate mortgages are generally very affordable, especially when rates are low. Consumers of fixed rate mortgages are faced with having to choose between a 15-year fixed rate mortgage or a 30-year fixed rate mortgage. All three variable rate mortgages have initial payment rates based on current Prime rate of 4.00%. These variable rate mortgage programs have varying terms from 3 months, 6 months, to 5 years. The 5-year variable rate mortgage has an initial payment rate of 4.25% but for the duration of 5 years, the rate would be less 0.75%. A home mortgage is actually different from a home loan. A home mortgage is the contract that you sign in order to get a loan from a banking institution or lending company. The loan is the money that the lender provides for you. There are many kinds of home mortgages available in the market. These home mortgages differ in their loan terms or their rate status.