Meaning that if you paid a lump sum payment of $10,000, you would save yourself the interest on that amount every year going forward, because you no longer owe it on your mortgage. Plus it saves you interest for years to come on that lump sum amount. And it does it by the full amount you put down. The benefits of a lump sum mortgage payment is that it brings down the amount you owe on your mortgage immediately. This is unlike your normal mortgage payment where part of it goes to interest and part of it goes to the principal. Simply put when you pay a lump sum it all goes down on the principal of the mortgage. What are the Lump Sum Mortgage Payment Benefits? Providing there are no fees or charges involved with doing a lump sum mortgage payment. Which is decreases the amount you owe on the mortgage.įor example if you have a $100,000 mortgage and did a lump sum of $5,000 your mortgage would be $95,000 after the lump sum. Normally when you make a lump sum mortgage payment that amount goes down in full on the principle. What Happens to my Mortgage After I Make a Lump Sum Mortgage Payment? They will be able to tell you when you call them. If you don’t bank with them you can write a check or do a transfer. This will give them permission to take that amount out of your account and add it to the mortgage. To make a lump sum payment the process usually just involves calling your bank or lender and telling them that you would like to make a lump sum payment. How Do I Make a Lump Sum Mortgage Payment? This will show you what types of lump sum mortgage payments are allowed and when in the year they can happen, and the maximum you can make without penalty. There will be a section on the mortgage for additional payments and penalties. Not all mortgages are created equal so you will need to check with your bank or your mortgage documents (that barrage of papers you were given when you signed your mortgage). ![]() That date is typically the day of the year that you started your mortgage. While others only allow it on your mortgage anniversary date. Depending on your mortgage, some will let you do a lump sum payment whenever you want to through out the year. Lump sum definition: noun, a single payment made at a particular time, as opposed to a number of smaller payments or installments.Ī lump sum mortgage payment is a one-time payment that you can put down on your mortgage when you have extra funds. Here’s what I told them, I think it will be helpful to you too.įirst let’s just cover some basics on lump sum mortgage payments. These are all choices that should be given some thought. Is it best to refinance your mortgage first? Should you save up for a lump sum payment? ![]() When you decide to pay off your mortgage faster there is usually a question of which is the best way to go about it. This is All About Becoming Mortgage Free Faster After I gave my ever-so-patented “ It depends” I decided to break down the pros and cons of a mortgage lump sum and increasing your mortgage payment. A mortgage is your biggest expense and I think this is probably a pretty common question but most of us are afraid to ask.Īs we sat there it was made known that they had some room in their budget so there was extra money at the end of every month. Invitably the topic of mortgages come up when we are with friends. “So… lump sum mortgage payment or increase my monthly mortgage payment?” This was the big question that was thrown at me over dinner with friends last week.
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