What room is this? How many windows are there? What direction do they face? Adding transoms might be good, but very expensive.

WE need to see the entire wall and room to give informed opinions

Maybe just get blinds that you like better, or roman shades? Who said windows need to be at the ceiling??

I don't see the issue - but it might be because your picture doesn't offer any scale. How high are the ceilings? How much space is between window and ceiling?

There are relatively inexpensive ways to mask what you believe is an unsightly space between the window and the ceiling. Purchase woven blinds and hang them at the height that you want the “window” to be, relative to the ceiling. The upper part of the blind will cover the wall space above the window. Just be sure, if you want the blinds to fully cover the window in the down position that they are long enough to reach the sill. To mask the blind’s sides, draperies, also hung at the level of the blinds, to the floor. The windows in this room, at least, will appear to be taller, even if they are not. If this is an issue through the entire home, then I suggest that you get used to this unique feature of your home.

Add some molding to the window - you can do a higher top decoration to give the window some more height.

But I have to agree with others - there is nothing in the room to anchor this window. Once you have furniture and maybe some drapes , etc it will look completely different

Congrats on the new home.

Add crown moulding to your ceiling. Your windows are fine

And yes trim out the windows in wood!

IMO I need to see the space and i would be more concerned about that wall color. So post some pics of the whole space