Lump Sum Versus Payments

Lump Sum versus Payments

Lump Sum Versus Payments

One of the most important financial decisions any homeowner can make is whether to receive a lump-sum cash or payments for their home. The decision is not that difficult if you have a clear understanding of what you are getting yourself into. In this article I will give you an overview of the differences between these two payment options, along with their pros and cons.

When I talk about lump sum I’m talking about a one time payment. Lump sum is usually reserved for those who are in need of large amounts of money. For example, a person in foreclosure could receive the funds from the bank and pay off all of their mortgage within a short period of time. A person who has experienced a serious accident could receive a large cash award to help pay for medical bills or get replacement furniture.

Paying back a lump sum is usually very easy because you do not have to pay back any additional funds until you actually receive your check. But if you are in need of more than a single lump sum then you might be better off paying back payments. For example, a homeowner who needs to make repairs to their home can receive periodic payments over the course of years to help pay for the repairs. Another option is to sell your home and receive a lump sum to move on. If you plan to sell your home soon then this may be the best option for you.

Many homeowners who take out a loan to finance their homes also receive a lump sum when the loan is paid off. This can be a good choice if you have received a lower amount of monthly mortgage payments over the past few years than what you were paying before. Lenders will often require a certain amount of down payment to qualify for a loan such as a mortgage loan. A lower down payment will allow you to qualify for a loan even if your credit score is less than stellar.

Although lump sum is generally considered the best option when it comes to paying for your home there are some risks associated with it. For example, if you receive a larger than required down payment you may not qualify for the mortgage loan and will therefore have to pay a higher rate of interest than what you would with a higher down payment. Another risk is that when you sell your home in the future you will no longer have your home.

When it comes down to paying for your home with payments or a lump sum there is no right or wrong answer. It really depends on your situation and how much money you have to spend. as long as you have the necessary finances to pay for your home then both options are reasonable and should give you peace of mind.