Living in a tiny house might sound like a great idea, but do you know how to finance one?
- Many Americans would consider living in a tiny house for its affordability.
- Find out if this living situation is right for you and what you need to know about financing.
In the United States, house prices continue to climb. For many people, traditional home ownership may seem out of reach. But what about living in a tiny house? Would this living situation suit you? A recent survey revealed that 86% of Americans would live in a small house.
Real estate listing prices are exorbitant, and many sellers accept offers well above the asking price. For most people going through the home buying process, it’s a constant struggle to find a home within their budget and a buyer who will accept their offer.
But traditional home ownership isn’t the path for everyone. Some people may want to explore the idea of living in a tiny house. Although the living space is much smaller than most homes, this living situation can be more affordable.
Affordability is the most appealing aspect of tiny homes
Tiny homes have continued to be popular in recent years. A recent HomeAdvisor survey revealed that 86% of respondents would be willing to live in such a home. Baby boomers were less likely to want to than younger respondents.
Of those surveyed, 56% found affordability to be the most appealing aspect of living in a tiny house. A smaller footprint could result in cheaper living expenses, including utility costs.
But not everyone would buy a tiny house. Only 30% of respondents said they would consider buying one. Many liked the idea of renting a small house for the short term. Buying this type of home would require a greater commitment and investment.
How to buy a tiny house
Unless you have a lot of extra cash in your bank account, you’ll need to find a way to finance a tiny house. Financing a tiny home is different from financing a single family home and can be trickier.
Whether your house is on wheels is an important factor that could determine the type of loan you can get. Most traditional mortgage lenders will not finance a small home.
Instead of taking out a traditional mortgage to finance your purchase, you’ll likely need to consider other loan options. Personal loans, RV loans, and loans offered by small home builders can be options to explore.
It should be mentioned that some loans, such as RV loans, may have higher interest rates. Taking out a personal loan is a common way to finance the cost of a small home, and you may be able to get a reasonable rate if you have little or no debt and a high credit score.
What to consider before financing a tiny house
Examine the terms and interest rates before agreeing to take out a small home loan. Do the math to see how much interest you’ll pay over the life of the loan to make sure the loan meets your personal financial goals.
You also need to figure out all the costs associated with buying a tiny house. The house may be affordable, but the structure itself is not the only expense.
If you don’t already have land or if a family member or friend is willing to let you place your home on their property, you will also need land. Also, if you’re not buying a prefab home, you need to figure out how much it will cost for building materials, labor, and plans for the house.
Is the Tiny House lifestyle right for you?
Moving in or buying a tiny house is a big decision. The idea of living in a smaller house might appeal to you. But first, think about the impact of this life situation on your life.
You’ll likely live a simpler life and pay lower living expenses, but you’ll also have to adjust to living in a much smaller space. You would like to keep clutter to a minimum, so you may need to downsize some of your personal items. The smaller home life isn’t ideal for everyone.
If you’re considering buying a tiny home, you may be wondering which lender to use.
Lightstream is a lender with personal loans for small home purchases and related expenses like land purchases. Rates vary, but this lender offers loans up to $100,000.
You want to know more ? Review our top personal loan providers to find other loan options.
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