Question 1

What happens when the interest-only period ends?

Accepted Answer

Your payment jumps as you start paying principal. On a $1M loan, expect $2,000-$3,000 more monthly. Plan to refinance, sell, or budget for this increase.

Question 2

Can I make principal payments during the IO period?

Accepted Answer

Yes, most lenders allow extra payments toward principal. This reduces your balance and lowers the payment shock when full amortization starts.

Question 3

Do interest-only loans work for investment properties in Redwood City?

Accepted Answer

Some lenders allow it, others restrict IO to primary residences. Investment property IO loans typically cost 0.5-0.75% more in rate.

Question 4

How much do I need in reserves for an IO loan?

Accepted Answer

Typically 6-12 months of full PITI including taxes and insurance. Some lenders now accept verified crypto holdings as part of your reserve calculation.

Question 5

Are IO loans adjustable or fixed rate?

Accepted Answer

Most are ARMs with IO features for 5-10 years. Fixed-rate IO products exist but carry higher rates and stricter qualification requirements.

Question 6

Why would I choose an IO loan over a standard jumbo in Redwood City?

Accepted Answer

Lower initial payments and flexible documentation. If you're self-employed or have equity comp, IO with bank statement qualifying often beats trying for conventional approval.

Interest-Only Loans in Redwood City: Short-Term Payment Relief for Tech Equity Holders