Question 1

What happens when my interest-only period ends?

Accepted Answer

Your payment increases to include principal, typically jumping 30-40%. Most borrowers refinance before this happens or have income growth that absorbs the increase.

Question 2

Can I make principal payments during the interest-only period?

Accepted Answer

Yes, most loans allow extra principal payments without penalty. This reduces your balance and softens the payment shock when full amortization begins.

Question 3

Do interest-only loans work for primary residences in Kerman?

Accepted Answer

Yes, though they're more common for investment properties. Lenders require stronger reserves and exit strategies for owner-occupied homes with interest-only terms.

Question 4

How much lower are interest-only payments compared to fully-amortized loans?

Accepted Answer

Initial payments run 25-35% lower depending on rate and term. The savings decrease over time as rates or payment structures adjust at the end of the interest-only period.

Question 5

What credit score do I need for an interest-only loan in Kerman?

Accepted Answer

Minimum 680, but 700+ unlocks better rates and terms. Higher scores matter more for interest-only loans because lenders see them as higher risk than conventional products.

Interest-Only Loans in Kerman: Lower Payments for Strategic Borrowers