Because residential real estate tends to rise in value over time, buying a house is often cited as one of the best long-term investments one could make.
If you’re in the market to buy a house, you have likely heard that the amount of money you put down up front is a hugely influential part of your purchase. Your down payment can affect what kind of mortgage you’re able to secure, how much money your lender can give you, and the terms of the loan—not to mention the size of your monthly payments.
Most experts recommend that you put down 20% of the house’s purchase price, but according to research from the National Association of Realtors, the median percentage of down payments made in the US in 2021 was 12% of the purchase price.
Although making a smaller down payment may seem appealing if you’re eager to buy soon, putting such a small amount down can cost you in interest and fees from your mortgage over time. Additionally, lenders may be less inclined to offer favorable interest rates to people with a higher loan-to-value ratio because it implies an increase in risk. On the other hand, making a larger down payment can deplete your savings in the shorter term, leaving you with less of a financial cushion to depend on if something goes wrong.
Depending on your financial situation, using your structured settlement funds to make a larger down payment on a home could be a great way to keep your mortgage rates and fees down. Keeping your fees and interest down while your property’s value grows could lead to a bigger payout when or if you decide to sell down the line!
2. Complete a home renovation
As noted above, real estate can be a great long-term investment—but it’s not necessarily a good investment if you’re looking to build your wealth in the short term.
If you already own a home, however, you could use your structured settlement funding to boost the value of your property more quickly than if you were to wait for your home to appreciate value over time. There’s a reason “flipping” homes has become so popular; it’s a great way to add a lot of value to a home in a short amount of time.
If you’re interested in learning about which desirable home renovations are likely to add value to your property, check out our blog post about that here.
3. Invest in your education – or your loved ones’