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. On a 30-year loan with 10 years interest-only, you'll amortize over the final 20 years with higher monthly payments.

Question 2

Can I refinance before the interest-only period ends?

Accepted Answer

Yes, most borrowers refinance or sell before payments adjust. You need sufficient equity and qualifying income to refinance into a new loan.

Question 3

Do interest-only loans work for primary residences in Santa Rosa?

Accepted Answer

Yes, though most lenders prefer these loans for investment properties. You'll need strong income documentation and higher down payments for primary residences.

Question 4

How much can I save monthly with an interest-only loan?

Accepted Answer

Depends on loan amount and rate, but typically 25-35% less than a fully amortized payment. A $700K loan might save $1,400-$1,800 monthly during the interest-only period.

Question 5

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

Accepted Answer

Most lenders require 700+, though some programs accept 680 with larger down payments. Higher scores get better rates and terms.

Question 6

Are interest-only loans riskier than conventional mortgages?

Accepted Answer

Yes—you build no equity through payments and face payment shock when principal starts. They work when you have a clear exit strategy and strong financial cushion.

Interest-Only Loans in Santa Rosa: Lower Payments for High-Income, Variable-Cash-Flow Borrowers