How your structured settlement might help you buy your first home

How you can sell structured settlement payments to use for a home purchase.

For many people home-ownership is the biggest part of living the American dream. Unfortunately, with today's job market, and sluggish economy coupled with increased costs of living, that dream is just that, a dream. There are thousands of people and families who are paying more for rent than they would be for a mortgage payment.

Why are people paying for rent when they could be investing in their home? For most, it is coming up with the single most important aspect of buying a home: the down payment.

"For most first-time home buyers, saving enough money for a down payment is the biggest hurdle to owning a little piece of paradise. Traditionally, lenders have required a down payment of at least 20% of the home's purchase price." -New York Times March 23, 2008

Many people don't know that once they enter into a structured settlement agreement they cannot alter the agreement. It is final. Even more people don't realize that by law they are allowed to sell structured settlement payments for a lump sum of cash.

Let's begin by first explaining the laws regarding selling structured settlement or annuity payments.

You legally have the right to sell some or all of your future payments for a lump sum now. No matter which state you live in, your money is still your money. A court will review your transaction and decide that approval will not negatively or adversely affect the individual.

When you sell structured settlement payments you agree that you will receive a one time lump sum for those future payments at a discounted amount.What is the discounted amount? The total amount of money you would receive over a specified period of time includes interest that you have not earned yet. Since you are no longer waiting for this money, the amount is discounted.

Now lets move on to the quote. Your quote is the amount of money you would receive in a lump sum based on the value of your future payments. In order to ascertain how much money your payments are worth, you would need to get a quote from a company that will purchase your settlement payments. You can choose to get a quote based on selling settlement payments in part or wholly.

Getting the quote.

You will need to provide the company or companies buying your settlement payments with three pieces of information. You will need to tell them how much your payments are, how often you receive your payments, and how many are left. This basic information will give you an idea of how large the lump sum is based on the number of payments you sell, and which payments you sell.

You can sell payments that are in the beginning or at the end. Keep in mind that your payments are worth less in the future. For example. The payments you would be receiving in the next 5 years are worth more than those you would be receiving in 15 years. This is all due to inflation, interest, and cost of living. The buying power of twenty dollars today is not going to be the same in 15 -20 years.

How much does it cost to get a quote?

Getting a quote should not cost you anything. You should get several quotes to see which company will give you the-most for your money. After you have decided which company will service your needs best. You will then have to furnish them with proof of your settlement benefits with what is typically known as a an assignment of benefits letter. If you do not have one, the company can, with your permission obtain a copy of this for you.

"How long will the process take before I get my lump sum?"

Usually you will have your money in approximately 90-120 days. The time frame is based on how long it will take to obtain and verify your benefits, and how long it takes the court to schedule a hearing to approve the transaction.

This lump sum can be used as a down payment for the purchase of a home, or even a college tuition, home repair, car purchase, etc. How many payments you sell, and how much of a lump sum you will need is going to be determined by your financial goals and needs. If you are lookng to buy a home, Remember that the larger the down payment you are able to give to a lender, can and will ultimately reduce your monthly mortgage amount as well.