Question 1

How long does the interest-only period last?

Accepted Answer

Most IO loans offer 5 to 10 years interest-only. After that, your payment resets to cover both principal and interest.

Question 2

Do I build equity during the IO period?

Accepted Answer

Only through appreciation. No principal pays down until the IO period ends, so market value drives your equity.

Question 3

Can I refinance before the IO period ends?

Accepted Answer

Yes. Many borrowers plan to refinance or sell before the payment resets. Have that strategy before you close.

Question 4

Are interest-only loans available for investment properties in Watsonville?

Accepted Answer

Yes. Investors use IO loans to maximize monthly cash flow. Some lenders require higher reserves for non-owner-occupied IO loans.

Question 5

What happens to my payment after the IO period?

Accepted Answer

It increases — sometimes significantly. You're now paying principal plus interest over the remaining loan term. Run those numbers first.

Question 6

Is an interest-only loan harder to qualify for than a conventional loan?

Accepted Answer

Yes. Non-QM status means stricter credit and reserve requirements. Rates vary by borrower profile and market conditions.

Interest-Only Loans in Watsonville, CA