Buying tiny houses is a tendency that grows daily. These little houses can really help you bring down your cost of living. Find out their prices and how you can finance them.
If in the 2000s the trend was to buy large houses with all possible luxuries, but nowadays, buyers are looking for functional and efficient houses. Tiny homes with less than 500 square feet of living space offer lower maintenance costs for the owner and can also make life a lot simpler while you work your way to your financial goals.
With all the economic struggle that the Covid-19 pandemic has brought and the economic crisis that isn't yet behind us, looking into this option if you are planning on moving could be a great idea.
The costs of a tiny house
To start with, the upfront cost for a tiny home is fairly low. Where the national median home value is $220,000, these small dwellings can be built with raw materials for as little as $23,000, and prebuilt or used tiny homes can cost $6,000 to up to $70,000, on average.
Tiny homes come with enormous financial benefits: the "all in" cost of living can be around $575 per month, including food, gas, insurance, phone, and other living expenses.
The type of loan you'll need depends on the tiny home you buy, but the relatively low cost of tiny home living enables a great number of possibilities when you analyze financing.
Cash: Many people choose to build in stages, and save up to pay in cash as they go. This way, they finish the project free of debt.
Credit cards: With a card that offers zero interest, you may be able to pay for a tiny home to be built, without any interest for 12 months or longer. Regular cards, that are no longer in the introductory offer period have an average interest rate of around 17%.
Mortgage: With a traditional mortgage, tiny homeowners may be able to qualify for a lower interest rate than they could get with other financial products.
RV loan: Many tiny homes are on wheels, so an RV loan for recreational vehicles is an obvious choice.
Personal loan: Since most personal loans are usually available in amounts up to $35,000, they are often enough to cover the cost of a tiny home altogether and these loans can mimic a traditional fixed-rate mortgage.
Tiny home loan: There are also a handful of online lenders that offer loans specifically for tiny homes, with no fees and repayment terms of 24 to 84 months for applicants with excellent credit.