If you own a house in the U.S., odds are you are planning a home improvement project. In fact, 58Read more…
Why (and how) are people buying tiny homes?
Whether you call them tiny homes or tiny houses, diminutive domiciles are being purchased across the age spectrum, particularly among millennials, singles and retirees. While the affordability of these smaller dwellings is certainly a driver of the trend, there are other common reasons for buying a tiny home. These include wanting to:
- Downsize living space and environmental footprint.
- Convert rental dollars into funds that instead go toward building equity in housing.
- Purchase a home at a lower cost than traditional housing, turning home ownership into an affordable expense with increased financial freedom.
- Enjoy the ease and speed of building a home that’s often customized to the owner’s preferences.
- Have the flexibility to live on smaller sites or unique locations.
- Have the ability to easily move housing, should the need or desire arise.
What are some of the incremental expenses that prospective buyers should budget for, beyond the basic cost of a tiny home?
While some potential buyers might be enamored of the savings of owning a tiny home, there are other costs that must be considered. Before you move in, you may need to:
- Purchase a trailer as a foundation or to transport your home.
- Purchase or rent land to put a tiny home.
- Customize your tiny house.
- Buy new furnishings.
- Purchase a solar energy system or generators.
- Install professional installation for landscaping and air conditioning.
When a home costs as little as $25,000, what financing options are available?
- Despite their small stature, tiny homes are still a big investment. Tiny homes often do not qualify for mortgages due to their low cost, high mobility and small footprint.
- As you budget the financing you’ll need for your purchase, ask your lender whether incremental costs (and any other expense associated with your tiny home purchase) can be incorporated into your financing.
- Consideration for financing your tiny home may include:
- Savings – Some homeowners are tackling ambitious savings goals to complete the project in cash, preventing debt and interest payments. Even using cash in combination with another financing option can reduce the total borrowed, so you can get back to saving faster.
- Home Equity Line of Credit – If homeowners have accrued enough equity in their home, they can take out a home equity loan and use it to purchase a tiny house.
- RV loan – Tiny homes built on trailers and certified by the Recreational Vehicle Industry Association can be financed through an RV loan. Many tiny house manufacturers are building these homes as RVs to be easily mobile and qualified to park in RVIA-certified parks and campgrounds.
- Unsecured personal loan – For borrowers with good credit, an unsecured personal loan can be an attractive option. Some lenders offer personal loan financing at RV rates. Research online to find lenders who may be able to help you with a personal loan for a tiny home. Be sure to check whether a lender charges fees for its applications, account servicing or points on the loan itself, as these additions can significantly increase your overall cost.