Question 1

What happens when the interest-only period ends?

Accepted Answer

Your payment increases to cover principal and interest over the remaining loan term. Most borrowers refinance or sell before this happens. Plan for a 30-50% payment jump if you keep the loan.

Question 2

Can I pay principal during the interest-only period?

Accepted Answer

Yes, most programs allow extra principal payments without penalty. You're not required to pay principal, but you can reduce the balance anytime. Check your specific loan terms for prepayment rules.

Question 3

Do interest-only loans work for primary residences in San Juan Bautista?

Accepted Answer

They can, but most lenders prefer investment properties or second homes. Primary residence loans face tighter scrutiny and may require larger down payments. Your income stability matters more for owner-occupied properties.

Question 4

How much can I save monthly with interest-only payments?

Accepted Answer

Payments typically run 25-35% lower than fully amortizing loans during the interest-only period. On a $600,000 loan, you might save $1,200-$1,500 monthly. Rates vary by borrower profile and market conditions.

Question 5

What credit score do I need for an interest-only loan?

Accepted Answer

Most lenders want 680 minimum, but 700+ gets better pricing. Scores below 680 face steep rate premiums or outright declines. Your asset reserves and down payment matter as much as credit score.

Interest-Only Loans in San Juan Bautista: Lower Payments for Strategic Borrowers