Question 1

What happens when the interest-only period ends?

Accepted Answer

Your payment increases to include principal, typically 20-40% higher. Most borrowers refinance or sell before this adjustment occurs.

Question 2

Can I pay principal during the interest-only period?

Accepted Answer

Yes, most lenders allow extra principal payments without penalty. This reduces your balance and future payment amount.

Question 3

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

Accepted Answer

They can, but lenders scrutinize your ability to handle the adjusted payment. Investment properties are more common uses for this product.

Question 4

How much lower are interest-only payments?

Accepted Answer

Typically 25-35% lower than fully amortizing payments. Exact savings depend on loan amount, rate, and interest-only term length.

Question 5

What credit score do I need for interest-only in Orange County?

Accepted Answer

Most lenders require 680 minimum, but 720+ gets better rates. Your income and assets matter more than score alone for approval.

Interest-Only Loans in Rancho Santa Margarita: Lower Payments During Master-Planned Growth