Author: Holly Johnson / Source: Wise Bread
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Please visit our Advertiser Disclosure to view our partners, and for additional details.While homebuyers of the early 2000s seemed to want enormous starter castles with every amenity imaginable, the last few years have brought on a renaissance in home building. Simplistic, efficient homes are becoming more popular as homeowners realize they need less space and want less responsibility.
Some homeowners have even taken their quest for less to the extreme by buying or building “tiny homes,” or homes with less than 500 square feet of living space. Not only do these tiny dwellings offer less maintenance and upkeep for the homeowner, but they can make your life simpler, too.
Tiny home costs
The Tiny Life founder, Ryan Mitchell, says that, in addition to the simplicity aspect, tiny homes come with financial benefits that are hard to deny. Mitchell says that he’s been in his tiny home for almost five years and pays only $15 per month in utilities. His “all in” cost of living is around $575 per month, including food, gas, insurance, phone, and other living expenses.
Of course, part of the allure of tiny homes is the fairly low upfront cost. According to The Tiny Life, building a tiny home with raw materials can cost as little as $23,000. Prebuilt or used tiny homes run the gamut from $5,000 to up to $75,000, on average, but they still cost considerably less than the national median home value of $218,000.
Financing options
The relatively low cost of tiny home living opens the door to a world of possibilities when it comes to financing, but the type of loan you’ll need depends on the tiny home you buy. (See also: 9 Things to Consider Before Retiring to a Tiny Home or RV)
Mortgage
According to Fred Glick, CEO of U.S. Loans Mortgage Inc., homeowners who want to buy a small home that is permanently affixed to a foundation and sold with a lot will need to apply for a traditional mortgage for their tiny home unless they have the cash to pay for it outright. The mortgage application and closing processes would be exactly the same as if they were buying any other home in this case, with the only difference being the size of the home.
One big benefit of this strategy is that, with a traditional mortgage, tiny home dwellers may be able to qualify for a lower interest rate than they could get with other financial products.
Personal loan
Personal loans are also popular when it comes to financing tiny homes. Since most personal loans are usually available in amounts up to $35,000, they are often enough to…
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