When we were thinking of transitioning to Tiny r(E)volution v.3.0 we were perhaps most concerned about having to enter back into the mortgage pool. We knew we didn’t have as much as we would like for a down payment. We knew our monthly budget was one we were happy with and wanted to work within the parameters of. But what we also knew is that we were more interested in a small home than anything else. We thought 800 sq. ft. would be ideal. We would quickly add a front porch and a small back deck and have an ideal space for our family. Because of such we were confident we would be met with success in our search. We had seen both in theory and in practice that tiny houses and small homes can free someone from a mortgage. We were going to prove it again!
In 2012 alone some 1,342,489 homes were in a state of foreclosure; default notices, scheduled auctions and bank repossessions. The average foreclosure sales price? $175,872. So what does that mean?
That means a number of things, the least of them being that over 1 million families were living in a dwelling they never imagined themselves in when they signed loan papers, closing notices, rent checks, and equity forms. It means that according to a 2009 report by the National Coalition for the Homeless, at least 1 in 10 homeless people had lost their homes to foreclosure. It means that change is inevitable and already overdue. But here we are in 2016 and while overall foreclosure rates are lower than last decade, CoreLogic reports 38,000 completed foreclosures in May 2016 alone. To my opinion that is still an unacceptable number.
Granted, there are numerous reasons as to why a home goes into foreclosure. However, a large percentage of those is because the mortgage note on them goes unpaid. In other words, the lender is saying, “Enough is enough. Pay up or walk.” This is all too often a result of homeowners being in over their head. They have mortgage payments that exceed what they can truly afford each month. It is time for Americans to wake up and see that they don’t need to fall victim to the real estate game in that fashion. Tiny houses and small homes can be the answer we’re all after. They cost less requiring a lower mortgage figure allowing for significantly lower monthly payments. They are the sometimes scoffed at solution for home defaults in our nation.
In 2009 when we began really facing down our consumer debt, our lack of financial options, our desire for a home, and other truths, we quickly realized that small spaces were not just our only option but were actually a very attractive one. A small home would keep our budget in check, keep our consumption at bay, and give us DIY projects to make our house into a home. Houses built with an emphasis on need -vs- want and simplicity through creativity as well as basic floor plans and building specs (think rectangle rather than octahedron), translate to a lower mortgage. Tiny houses and small homes assist in minimizing the major expense of a mortgage or building a house without a mortgage by cutting back on what is excess (like often unused square footage in the home) and focusing on dual purpose items and well-appointed spaces.
But even beyond that our small home means a new freedom. What we have realized through the past six years is that working 60 hours a week so that we could afford a home oversized for our needs, save for a new car that was larger than we could fill, shop at places to buy things we already didn’t have room for, was no fair trade at all. A small home would minimize our overhead. Minimizing our overhead and reassessing our needs and wants would allow me to cut back on hours at work; hours that could be devoted to our family. There is an obvious exponential pattern in reducing your footprint. Finding a solution that reduces large and overwhelming debt can only bring more financial ease and joy to your life.
Why avoid a huge home loan or mortgage?
- Income from a job is not guaranteed. In today’s economy of constant lay-offs and downsizing no job is absolute.
- The purchase price of a house multiplies anytime the banks want to increase the interest rate. That equals an uncertain payoff schedule.
- Financial strain and problems cause relationships to fracture, or even disintegrate entirely, from the stress.
- Want to go on vacation or out-of-town a few times a year? Impossible. The bank still needs payment which means more working in order to pay off a mortgage debt for the next 30+ years.
And this is just the tip of the iceberg. This doesn’t even account for how carbon footprints can be shrunk by working less, living in less, consuming less, etc. If the work week could be cut to four full time days that would be one more day of car-free living (no fuel used, no exhausted emitted, no oil burned). If your home is the size you need you spend less on heating/cooling, less on furnishing, and less on raw materials (which tend to exhaust natural resources and poison our planet).1
Where do I find out more about small homes?
- There are small house plans to suit every need. Some can even be delivered to your parcel of land!
- Read up on others who are building a house without a mortgage.
- Blogs like Tiny House Blog focus on the tiny house community.
- See what is already on the market.
- Don’t think brick and mortar. Try taking a peek at unusual house plans.
- Create your own house plan based on your own needs and your own budget!
1 Parts of this entry originally appeared on Living In Small Houses