Purchasing a home is something that often symbolizes becoming a successful adult; it means you have a stable job, you have a financial plan for the future, and you might even have a family. Whether you’re 25 or 55, buying a house means that you’re comfortable in your environment and you’re confident that you’ll settle in.
But consider this: As of October 2015, the average cost of a new home was $366,000. Even a house for a small family can be very expensive, and it’s not always easy to predict how much money you’ll have to pay in a down payment.
Although taking out a mortgage is always an option — and it’s something that most homeowners do — you could end up paying 5%, 10%, or 20% of the total sale price in a down payment for a mortgage. This 15% difference can mean the difference between purchasing a new home now or waiting until you’ve saved up more money. And even with a mortgage, you’ll be carrying that debt over your head for a long time. The average household in the U.S. today owes about $165,892 on mortgage payments.
One solution which many homeowners have found is to sell their structured settlement payments. The average structured settlement payout is $324,000 — just slightly under what the average new home costs today. Although a monthly payment of $500 may be enough to cover basic items and medical expenses, it’s not even close to what you’d need for a down payment on a new home. Cashing out your structured settlement too early can result in penalty fees as high as 10%, and that’s a lot of money paid to the insurer for absolutely no reason.
Selling your structured settlement payments can be a great way to avoid paying those fees while still being able to invest your money in any way you see fit. Maybe you’re already looking to buy a new house; maybe you have another investment in mind! However you spend your money, you can be confident that you’ve made a good decision.