Most lenders of interest-only mortgage rates do not put any restrictions or penalties should you find it convenient to start paying off the principal loan balance. Even with prepayments, many interest-only mortgage rate lenders will still let you pay up to 20% of your loan balance during any 12 month period without prepayment penalties. Fixed Rate Home Mortgage Rates Even though home mortgage rates are low, fixed rate home mortgage rates roughly remain the same. This is due to the fact that fixed rate mortgage rates are based on bond rates and not on fed rates. For most people, refinancing a home only makes sense if the new home mortgage rate is 2% lower than your current rate. These include US Treasuries, corporate bonds, foreign bonds, bank rate mortgages, and others. The bank rate mortgage investors act like typical consumers. That is, like you, they want two opposing things: low payments on their bank rate mortgages and high returns on investments. The demands of these investors play a significant role in moving the yields of the bank rate mortgage markets. This means that your monthly payments for your second mortgage loan will not be affected by any outside changes. Some companies also offer second mortgage loans with variable rate payments. These variable rate second mortgage loans periodically experience rate adjustments. A variable rate second mortgage loan might be cheaper than a fixed rate payment in the long run. Greater suitability and better mortgage options are what mortgage brokers bring to their customers. For instance, your credit history is not that great. Banks generally reject mortgage applications if the credit score is below 670. With a mortgage broker, you can shop around for a lending company that offers bad credit mortgage loans. Thus at the end of each loan term where balloon payment mortgage is applied, no money is owed. With balloon payment mortgages however, the monthly payment only comprises of interest or a combination of interest plus a small amount for the principal. No matter the case, when the balloon payment mortgage term expires, the balance is due in full.