Question 1

Am I building equity during the interest-only period?

Accepted Answer

No. You're paying interest only — your balance doesn't shrink. Equity grows only if the property appreciates.

Question 2

Can I use this loan for a vacation home in Sutter Creek?

Accepted Answer

Yes. Second homes and investment properties are common use cases. Expect a higher rate than a primary residence.

Question 3

What happens when the interest-only period ends?

Accepted Answer

The loan recasts and you start paying principal plus interest. Monthly payments will increase — sometimes significantly.

Question 4

Do I need to show tax returns to qualify?

Accepted Answer

Not always. Some IO lenders accept bank statements or asset depletion instead. That's where non-QM flexibility helps.

Question 5

Is an interest-only loan risky?

Accepted Answer

It can be without a plan. Borrowers who know their exit — refinance, sale, or income growth — handle these loans well.

Question 6

How does my credit score affect my IO loan rate?

Accepted Answer

Significantly. Non-QM lenders tier pricing sharply by credit score. A 740 versus a 700 can mean a meaningful rate difference. Rates vary by borrower profile and market conditions.

Interest-Only Loans in Sutter Creek, CA