Stephan Coufos' Blog
12 River Rd, Andover, MA 01810
111 Brady Avenue, Salem, NH 03079
Right now, one version of minimalism drives the tiny house movement. More than simplifying life and being mindful of excess, the move to a tiny home purports to be environmentally friendly, budget conscious, and somewhat Utopian. So, is it just a fad? Or, is it all that and a bag of chips?
Accentuate the positives
For those living in tiny homes, either mobile or stationary, several advantages make it a great option. One of those is merely having less space in which to gather clutter. Of course, if you're a hoarder personality, the austerity required by most tiny homes might just drive you crazy, or it could cure your gathering habits once and for all. Since most tiny home dwellers subscribe to the "a place for everything and everything in its place" philosophy, making decisions on what and when to buy something filter through that lens. For example, if you buy this, you’ll need to sell that to make room, since they both won’t fit.
Another advantage is budgetary. In short order, full ownership of the tiny home becomes possible. If you build yours from scratch, you can build it debt free, so you end up owning your home outright. Of course, this concept—owning a home that is mobile—is not the same as owning a house on a property that you also own, but it does reduce monthly outgo in many cases. Most often, unless your home sits on your or someone else's property for free, you'll have space rent in an RV park (if your tiny house is on wheels, it’s legally considered an RV) or tiny-house community (several tiny houses built on foundations around a single more substantial dwelling).
There are negatives
As the movement grows, city, county, and state zoning laws need to adjust to allow for the differences in a tiny home from a typical dwelling before they're accepted everywhere. Some locales now have specific codes to cover where tiny houses sit, what connections they require, and other things like egress and ceiling height. So, before you follow the trend to build your own, make sure you know the rules in the location you want to live.
Living in tight quarters can stress relationships. If you're a person that needs time on your own, living by yourself in a tiny house might be perfect. But living with someone else means sharing space all the time. Even bathrooms aren't as private in a tiny home, and by nature, they're incredibly small. In inclement weather, those prone to cabin fever might find the confined space difficult. And when things go wrong (a broken composting toilet, roof leak, or broken appliance, the often feels magnified.
Before embarking on a permanent tiny space lifestyle, consider renting one or living in an RV for a while to see if it’s for you. If you know it’s what you want, then talk to your property specialist about where to buy with favorable zoning laws for your setup.
111 Brady Avenue, Salem, NH 03079
There are so many factors that go into finding and securing the financing to buy a home. While lenders require quite a bit of information for you to get a loan, you still need to be aware of your own financial picture. Even if you’re pre-approved for a certain amount of money to buy a home, you still need to dig into your finances a bit deeper than a lender would. The bottom line is that you can't rely solely on a lender to tell you how much you can afford for a monthly payment on a home. Even if you’re approved to borrow the maximum amount of money for your finances to buy a home, it doesn’t mean that you actually should use that amount. There are so many other real world things that you need to consider outside of the basic numbers that are plugged into a mortgage formula.
Run Your Own Numbers
It’s important to sit down and do your own budget when you’re getting ready to buy a home. You have plenty of monthly expenses including student loan debt, car payments, utility bills, and more. Don’t forget that you need to eat too! Think about what your lifestyle is like. How much do you spend on food? Do you go out to the movies often or spend a regular amount of cash on clothing? Even if you plan to make adjustments to these habits when buying a home, you’ll want to think honestly about all of your needs and spending habits before signing on to buy a home.
Now, you’ll know what your true monthly costs are. Be sure to include things like home insurance, property taxes, monthly utilities, and any other personal monthly expenses in this budget. If you plan to put down a lower amount on the home, you’ll also need to include additional insurance costs like private mortgage insurance (PMI).
The magic number that you should remember when it comes to housing costs is 30%. This is the percentage of your monthly income that you should plan to spend on housing. Realistically, this could make your budget tight so this is often thought of as a maximum percentage. By law, a lender can’t approve a mortgage that would take up more than 35% of your monthly income. Some lenders have even stricter requirements such as not allowing a borrower to have a mortgage that would be more than 28% of monthly income. This is where the debt-to-income ratio comes into play.
As you can see, it’s important to take an earnest look at your finances to avoid larger money issues when you buy a home.