Question 1

What happens when my interest-only period ends?

Accepted Answer

Your payment increases to cover principal plus interest for the remaining loan term. On a 30-year loan with 10-year IO, you'll amortize the full balance over 20 years, raising your monthly payment significantly.

Question 2

Can I make principal payments during the IO period?

Accepted Answer

Yes, most IO loans allow extra principal payments with no penalty. This reduces your balance and lowers the payment jump when full amortization starts.

Question 3

Do interest-only loans have higher rates than conventional mortgages?

Accepted Answer

Typically yes, by 0.5-1.5%. You're paying for flexibility and lower initial payments. Rates vary by borrower profile and market conditions.

Question 4

Who should avoid interest-only loans in Tulare?

Accepted Answer

Anyone without a clear refinance or sale plan before the IO period ends. If you're counting on appreciation alone to save you, reconsider.

Question 5

Can I refinance an IO loan before the principal payments start?

Accepted Answer

Yes, most borrowers refinance during the IO period. Current market expects multiple rate cuts in 2026, which could create good refinance opportunities.

Interest-Only Loans in Tulare: Lower Payments, Maximum Flexibility for Strategic Borrowers