Question 1

How long does the interest-only period last?

Accepted Answer

Most lenders offer 5, 7, or 10 years interest-only. After that, payments jump to cover principal plus interest for the remaining term.

Question 2

Can I refinance before the interest-only period ends?

Accepted Answer

Yes, most borrowers refinance within 3-5 years. You'll need equity and stable income to qualify for new terms.

Question 3

What happens if I can't afford the payment increase?

Accepted Answer

You must refinance or sell before principal payments start. Lenders won't extend interest-only terms without a full new loan application.

Question 4

Do interest-only loans work for primary residences?

Accepted Answer

Yes, but lenders scrutinize these more than investment properties. You need stronger reserves and income documentation for owner-occupied homes.

Question 5

How much higher are interest-only rates?

Accepted Answer

Expect 0.50-1.25% above conventional rates. The spread depends on credit score, down payment, and loan size. Rates vary by borrower profile and market conditions.

Question 6

Can I pay principal during the interest-only period?

Accepted Answer

Most loans allow extra principal payments without penalty. Check your specific loan terms to confirm prepayment rules.

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