Question 1

What happens when the interest-only period ends?

Accepted Answer

Your payment jumps — you start paying principal and interest on the full balance. Plan for that increase before you close.

Question 2

Can I build equity with an interest-only loan?

Accepted Answer

Only if the property appreciates. You won't build equity through payments during the IO period.

Question 3

Is an interest-only loan a good fit in Seaside?

Accepted Answer

It works for buyers with strong cash flow who want lower payments now. It's not the right tool for every buyer in this market.

Question 4

How long is the interest-only period?

Accepted Answer

Typically 5 to 10 years depending on the lender. After that, the loan fully amortizes over the remaining term.

Question 5

Do interest-only loans require higher credit scores?

Accepted Answer

Yes. Most lenders start at 700. Some non-QM lenders go lower, but expect a rate premium for it.

Interest-Only Loans in Seaside, CA