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Interest-Only Loans in Compton
Interest-only loans make sense for Compton investors banking on appreciation or flippers who'll sell before the interest-only period ends. They don't work for most owner-occupants who need to build equity.
These are non-QM products. You'll pay higher rates than conventional loans, but the reduced payment during the interest-only period frees up cash for rehab work or holding multiple properties.
Most lenders require 680+ credit and 20-25% down for interest-only products. Some will go to 660 if you put 30% down and show strong reserves.
You'll need to prove you can handle the fully-amortized payment when the interest-only period ends. Lenders stress-test at higher rates to ensure you won't default when payments jump.
Banks don't touch these loans anymore. You're working with non-QM specialty lenders who price deals individually based on your full borrower profile.
Interest-only periods run 5-10 years depending on the lender. Some offer fixed rates during that period, others use adjustable structures. Rate differences can exceed one full point between lenders for the same borrower.
I see three borrower types who use interest-only in Compton: fix-and-flip investors who'll sell in 18 months, landlords maxing their property count, and self-employed borrowers with lumpy income who'll make balloon payments.
The worst use case is stretching to afford a home you can't actually afford. When the interest-only period ends, your payment can jump 30-40%. If you're not planning to sell or refinance before that happens, this loan will hurt you.
Compare interest-only to DSCR loans if you're an investor. DSCR loans fully amortize but qualify you based on rental income, not personal income. Interest-only gives lower payments but requires personal income qualification.
For non-investors, adjustable rate mortgages offer lower rates without the payment shock risk. ARMs build equity from day one while still giving you reduced payments in early years.
Compton's market favors investors who understand the area. Interest-only loans work here if you're buying below market, adding value through renovation, and selling into appreciation within 3-5 years.
Property condition matters more with interest-only loans. Lenders want to see that the home will hold value since you're not paying down principal. Deferred maintenance can kill your approval even with strong credit.
Your payment increases 30-40% as you start paying principal. Most borrowers refinance or sell before this happens.
Rarely. Most non-QM lenders require 20-25% minimum, and some want 30% down for lower credit scores.
Only if cash flow matters more than equity building. DSCR loans usually make more sense for long-term landlords.
Minimum 680 with most lenders. Some go to 660 with larger down payments and strong reserves.
Yes. Rates run 1-2% higher, but reduced payments during IO period can justify the cost for investors.
Mortgage financing for independent contractors and freelancers who earn 1099 income instead of traditional W-2 wages.
Mortgage programs that allow borrowers to qualify based on liquid assets rather than traditional employment income.
Non-QM loans that use 12 to 24 months of bank statements to verify income for self-employed borrowers.
Short-term financing that bridges the gap between buying a new property and selling an existing one.
Debt Service Coverage Ratio loans that qualify investors based on a rental property's income rather than personal income.
Mortgage programs designed for non-US citizens and non-permanent residents who want to purchase property in the United States.
Asset-based short-term loans primarily used by real estate investors for property acquisition and renovation projects.
Financing solutions tailored for real estate investors purchasing rental properties, fix-and-flip projects, or investment portfolios.
Home loans for borrowers who have an Individual Taxpayer Identification Number instead of a Social Security number.
Adjustable rate mortgages held in a lender's portfolio rather than sold on the secondary market, offering more flexible terms.
Non-QM mortgages that use a CPA-prepared profit and loss statement to verify income for self-employed borrowers.
Home loans with interest rates that adjust periodically based on market conditions after an initial fixed-rate period.
Specialized mortgage programs designed to support homeownership in underserved communities with flexible qualification criteria.
Mortgages that meet the guidelines and loan limits set by Fannie Mae and Freddie Mac for secondary market purchase.
Financing for building a new home or making major renovations, typically converting to a permanent mortgage upon completion.
Traditional mortgage financing not backed by a government agency, offering flexible terms and competitive rates for qualified borrowers.
Innovative loan products that leverage projected home equity growth to provide favorable financing terms.
Government-insured mortgages from the Federal Housing Administration with low down payments and flexible credit requirements.
A revolving line of credit secured by your home equity that allows you to borrow funds as needed during a draw period.
A fixed-rate second mortgage that provides a lump sum of cash by borrowing against the equity built in your home.
Mortgages that exceed the conforming loan limits set by the FHFA, designed for financing high-value luxury properties.
Loans for homeowners aged 62 and older that convert home equity into cash without requiring monthly mortgage payments.
Government-backed zero down payment mortgages for eligible rural and suburban homebuyers who meet income limits.
Government-guaranteed mortgages for eligible veterans, active-duty service members, and surviving spouses with zero down payment.