Are You Considering Lump Sum Versus Payments for Your Mortgage?
What’s the difference between lump sum versus payments? When you make a lump sum payment, you’re going to have more than just the money you received from selling your home, but the interest you paid back on your loan.
With a lump sum you’re usually giving up the house and all the equity that you have in it. This leaves you with less money than you originally started with, and you’ve got less than you started with when you bought the house. If you didn’t sell it fast enough, or if you waited too long, then you’ll also lose your home. This is why many people are choosing to get payments instead of a lump sum.
There are advantages to having both; a lump sum will give you cash right away, but you won’t be able to take that money with you and use it as you see fit. You’ll have to pay the loan back as soon as you get it, or else you’ll have more loans to pay off, which is why it’s typically cheaper to get one.
The main advantage to getting payments is that you can still enjoy the home, and the equity that you have built on it. It gives you the security of knowing that you will have the money you need if you need it. You don’t have to worry about the loan being paid off on time. There are lenders out there who offer great deals to those who prefer to pay in installments. In this way, you can afford to buy a new home, and keep paying on your current one, which makes it more affordable in the long run.
Another advantage of getting payments instead of a lump sum is that it allows you to have extra cash set aside for emergencies, like medical expenses. You can use that money to help pay for things you really need without having to sell your home or take out a second mortgage. You don’t have to deal with the mortgage payments at all.
There are pros and cons to each option, so it’s best to weigh your options and weigh the differences between the two. If you’re looking for ways to reduce your mortgage or get rid of some of your debt, it may be in your best interest to get a lump sum.