As millennials who came of age in the midst of the economic crisis and bursting of the real estate bubble, we tend to have a new view of homeownership and finance.
Many millennials are starting to embrace a minimalist and simplified lifestyle preferring smaller, more affordable homes. In fact, experts have suggested the movement toward buying tiny houses in which the financially-conscious are preferring to live in super-small homes- usually around 200 square feet- is a prime solution for millennials who are dreaming of homeownership.
Ease Into Homeownership with Tiny Houses
It’s no secret that tiny houses offer less space than the traditional, bloated dream home. But for millennials who are still adjusting to living on their own, or who aren’t prepared to take on the responsibility of thousands of square feet of maintenance and expenses, a small home offers an opportunity to ease into homeownership.
Many tiny houses are built on portable trailers, and the owner has to rent or lease a space to park the unit on a semi-permanent basis. However, the cost of renting a small plot is typically very low—no more than a couple hundred dollars per month at most—and requires very little upkeep such as mowing and gardening.
Additionally, there are communities popping up around the country that provide camping-like areas for tiny house owners to park their portable homes. Millennials tend to love the flexibility of not being bound to one place and having the option to pick up and move if an irresistible job offer comes their way. Between the lack of maintenance, lawn upkeep, and minimal monthly or annual expense, small houses are affordable and easy to maintain.
Making Homeownership a Viable Option
Millennials who feel homeownership is beyond their budget are jumping at the chance to own tiny houses rather than paying rent for the foreseeable future. These unique dwellings are the ideal solution where financial restraints are concerned. While an average home can easily cost a few hundred thousand dollars, tiny houses, on average, require just over $20,000 in materials. Millennials who can save enough to cover these costs will be proud of their accomplishment; and if financing is needed, it will be much easier to obtain than a full blown mortgage.
In fact, the interest paid on the typical home mortgage usually outweighs the original loan amount by a huge margin. For example, on a 30-year home loan in the amount of $200,000 with a generous 3-percent interest rate, the bank would make almost $350,000 in interest, which is 85 percent above the actual cost of the home. Tiny houses are not only more attainable, but considering the amount of money being saved on the overall cost of the home and the mortgage interest, it’s financially smarter and even more responsible.