In short, structured settlements can be an excellent proof of income for mortgage lenders. As long as you can document that you are receiving payments and that your payments are going to last a while, it should be accepted. Once you have found your perfect home, submitting an attractive offer to sell includes a letter showing your prequalifications as a buyer. If you have a structured settlement, you are not required to disclose that income to a mortgage lender, but the payments could help you qualify for a home loan.
Structured settlement holders include individuals who receive court-ordered damages in a regular program, such as those in pharmaceutical company agreements and other product liability awards. Insurance company payments for customer offenses and other personal injury settlement payments, including workers' compensation, also qualify as income under structured agreements. You can't borrow against your structured settlement, but you can sell all or part of it for a lump sum of cash. You can also request pre-settlement financing or demand advances to cover legal bills before a lawsuit settlement.
Usually, a person can pledge real or personal property as collateral for a loan from a bank. This is because the bank can seize real estate, land, jewelry, and other types of personal property and then sell them if you don't repay the loan. While structured settlements are assets and certainly valuable, there is no legal way for banks to sell their structured settlement payments. Why? Because it's your money, which is granted to you by the courts.
The inherent flexibility of a structured agreement means that it is suitable for compensating individuals for a wide variety of injuries and subsequent needs. Your lawyer or a structured settlement consultant will be able to explain additional details as they apply to your particular case. The tax-free status of structured settlement payments restricts the transfer of the settlement and therefore the bank cannot garnish it without court approval, which you are not likely to get. At this time, your lender's insurance department will review your financial documents and credit to determine if you qualify for a home loan.
It's also important to understand how lenders treat structured settlements when monthly revenues are expected to decline or end in the future. Documenting this income could be one way to show the mortgage lender that you will be able to make your mortgage payments. Inform your prospective lender that your rating package includes a structured settlement as part of your loan requirements. Structured settlements can also be designed to increase payments over the years, starting relatively low and ending at.
In other words, most banks don't give you a loan using their structured settlement payments as collateral, but rather it's a liability to them. If you decide that you might want to go for this option, you can look for a company that buys structured settlements. Home Legal Answers Structured Settlements for Personal Injury Characteristics of Structured Settlements. If you agree to take your compensation as a structured settlement, rather than receiving a large amount from the plaintiff, you will receive periodic payments over a fixed number of years.
You may be more comfortable with a smaller loan, especially if your monthly settlement income is expected to decline in the future, and you certainly have the right to choose the mortgage amount that best suits your needs. Call several mortgage lenders and ask them about the fees they charge for closing a mortgage loan, as well as their interest rates. Choosing to collect a structured settlement lump sum is by far a better option than payday loans or other types of loans. If you have a structured settlement, you may need a large amount of cash sooner than you expect to receive in your settlement payment schedule.
Given that you can't borrow against your structured settlement, selling your future payments for a lump sum can protect you in the long run. . .