Question 1

What happens when the interest-only period ends?

Accepted Answer

Your payment jumps to cover principal plus interest over the remaining term. On a 30-year loan with a 10-year IO period, you'll amortize over 20 years, increasing your monthly payment significantly.

Question 2

Can I refinance before the IO period ends?

Accepted Answer

Yes, most borrowers refinance or sell before principal payments start. Plan for this if you're counting on lower rates or higher property values to make the refi work.

Question 3

Do interest-only loans work for investment properties in Vacaville?

Accepted Answer

They can, but DSCR loans often make more sense for pure investors. IO loans shine when you need to qualify on personal income but want lower payments to free up cash.

Question 4

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

Accepted Answer

Most lenders want 680 minimum, but 700+ gets you better pricing. Rates vary by borrower profile and market conditions, so a higher score directly impacts your rate.

Question 5

Are interest-only loans riskier than traditional mortgages?

Accepted Answer

They carry payment shock risk when the IO period ends and you're not building equity early. You need a clear plan for the payment increase or a refinance strategy.

Interest-Only Loans in Vacaville: Lower Payments Without Selling Your Portfolio