Does making your mortgage payments in a lump sum make them go down? Keep reading to find out if it’s worth it or not.
What Is a Lump Sum?
This type of payment is where you pay off all your outstanding payments at once, without taking out any extra credit. You may think that because you’ll save a considerable amount of money, you’ll save money on your mortgage payments. However, if the sum you pay is too high relative to the mortgage you have, you may not get any money back at all. So what can you do? When you take out a home loan, it generally doesn’t matter whether you pay it monthly or once a year; the interest you pay is the same. If you’re paying mortgage payments from different sources, you’ll usually be paying the highest amount each month. You can have different sources of mortgage payments to suit you and your budget. It’s possible to stagger your payments if you pay them from different sources.
How Do These Payments Work?
One of the biggest differences between a traditional mortgage and a lump sum mortgage is how the payments are paid. With a traditional mortgage, you make the same payments month after month until you have paid off the loan, or until you move, sell or refinance the house. Your payments are set up so that if you make just a little more each month than your total mortgage payment, your monthly payment will go up. With a lump mortgage, you make a single payment on the lump sum amount instead of making a series of payments each month.
What Are The Benefits of These Payments?
First, let’s discuss the drawbacks of making your mortgage payments in a lump amount. These payments usually do not apply to homeowners with no-down-payment loans or FHA loans. Because they need a large down payment to secure a mortgage, they often cannot use lump payments to pay off the mortgage without losing their homes. You are allowed to pay off your mortgage with a lump amount, though. If you decide to use a lump this kind of payment to pay off your mortgage, it will count toward the required 10 percent minimum payment. Lumping sums into your mortgage payment will require that you pay the same amount to the lender every month. However, your monthly mortgage payments will be significantly lower, especially if the sum is a large one.
Contact Utah Sell Now
If you no longer want to pay off your mortgage in a lump sum or otherwise, it’s time to sell your home or property. That’s where Utah Sell Now comes in, we buy homes in any condition fast and in cash so you don’t have to go through the hassle of using a real estate agent or making costly repairs. Contact us today to get your written no-obligation offer for your Salt Lake City, Utah, home, and you could have cash in hand for your house in as little as seven days.