Question 1

Do I ever pay down the loan principal?

Accepted Answer

Not during the interest-only period. Once it ends, your loan fully amortizes and every payment includes principal.

Question 2

Can I pay extra toward principal during the IO period?

Accepted Answer

Most lenders allow it. Extra payments reduce your balance and lower the eventual amortized payment.

Question 3

Is an interest-only loan right for rental property in Avenal?

Accepted Answer

It can work if rent covers the IO payment. A DSCR loan may qualify you more easily on that same property.

Question 4

How long is the interest-only period?

Accepted Answer

Typically 5 or 10 years, depending on the lender. After that, payments reset to cover both principal and interest.

Question 5

Will my rate be fixed or adjustable?

Accepted Answer

Both structures exist. Fixed-rate IO locks your rate. Adjustable-rate IO adds two layers of payment risk at reset.

Interest-Only Loans in Avenal, CA