A new approach to tiny houses – how this millenial found a way to afford her own home
I don’t have a credit score. According to the three credit bureaus, I don’t exist. When I was younger (ages 18-24), I built up a fairly decent credit score… but, as so often happens in America, an illness for which I was hospitalized cost me everything. My medical bills were over $15,000, and I was making minimum wage. I lost my apartment, my job, and my car. I eventually had to file for bankruptcy.
Last year, the bankruptcy finally dropped off my credit report. Unfortunately, the damage was already done. During the period of time that glaring red mark had existed on my record, no one would give me credit; I was too much of a risk. Now that it’s gone, I have no credit history at all. And, again, creditors are reluctant to give me any. As such, every large purchase I’ve made has either been with cash or under my father’s name.
For the past nine years, my financial good sense and the fact that I make it my mission to never miss a payment have done me absolutely no good at all. There’s simply no record of it – and having no credit score makes it a little hard to get a mortgage loan. But, since I’m a millennial, you can bet your sweet bippy that’s not the only thing holding me back.
Millenials & mortgages
We came of age during the perfect financial storm. Decades of greed and poor decision-making led to the collapse of the big banks, which in turn managed to screw everyone over — especially the millennials. The housing market crashed; people all over the world lost their jobs and their pensions; and the banks — well, they made it out relatively unscathed. The rest of us were left writhing in the ashes, where years later, many are still desperately trying to pick up the pieces.
Despite the ignorant haters claiming it’s merely our love for fancy brunches or destination weddings that keeps us from purchasing homes, the reality is it’s not any one thing. Massive student loan debt, stagnant salaries, job uncertainty, low employee benefits, rising home prices, and a shortage of starter houses are only some of the things holding us back.
For many members of Gen Y, home ownership seems to be completely out of reach — particularly for those who still live with their parents. For a long time, I was one of those millennials. But then, a strange idea formed — what if I could combine living at home with owning a home?
The first time I saw a tiny house, I fell in love. As a forever single, the idea of having a perfectly me-sized home made my heart soar. Plus, I figured I’d actually be able to afford a tiny house — compared to standard homes, they’re hundreds of thousands of dollars cheaper. After doing some research, though, I came to the realization that the land needed for a tiny home is what really does you in. All together, it would cost me just as much.
It was a simple question from my therapist that started everything: “Do you think your dad might let you build a tiny house in his backyard?”
I approached my father, but he didn’t seem to be very comfortable with the idea. I shrugged my shoulders and dropped it. A few months later, he brought it up out of the clear blue. He had done some thinking and decided that he liked the thought of me having a nice little home in a safe neighborhood — and even if he didn’t say it out loud, I’m pretty sure he was secretly happy with the idea of me not completely leaving the nest.
However, after digging into the the actual nuts and bolts of the project, the price tag was still too high. I was looking at around $90,000 for a 500-square-foot home. Plus, the work that would have to be done — putting in lines, pipes, and connections to sewer, water, and gas — was well beyond our capability. And, the fact of the matter was, there was no way my non-credit score was going to get me a loan capable of covering the cost.
For a few weeks, it seemed as if all hope was lost. But then, my dad and his ever-analytical mind came up with a solution.
After returning home from dinner late one night, my dad plopped down next to me on the couch, propped his chin on his fist, and said, “What if we just built onto the house?” I raised an eyebrow and asked for the details. His idea was to build a 500 square foot addition complete with a full kitchen, living room, bathroom, and bedroom. There would be an outside door and walkway for any guests I had over, as well as an interior door connecting the two “houses” so our dogs could come and go as they please.
We did some quick math and quickly came to the conclusion that this would save a significant amount of money. As for the “mortgage”, my dad took out a home equity loan and I’m making the payments. All together, the project will cost $65,000, and my monthly payments will be $610 — easily affordable for a single adult in my meagre income bracket.
We, of course, had to have a rather uncomfortable discussion about what will happen when my dad passes away (I’ll be inheriting his home), but now we’re ready to get everything going. We have a contractor and plans, and construction will start early next month. I’ve even made my first mortgage payment — which is strange since I don’t actually have a house yet.
Our arrangement may seem a little bizarre, but it works for us. My dad and I have an outstanding relationship, my stepmother is amazing, and I like that this will make it much easier for me to care for my papa as he ages. As an added bonus, I don’t have to worry about selling my home or his when his time comes.
When I think on my soon-to-be home, I recognize that I pretty much lucked into it. It’s privilege, plain and simple. I’m fortunate to have a parent with whom I have a good relationship and who owns his own home. I’m fortunate to make enough money to afford my mortgage, small as it may be. I’m fortunate to live in a nice, safe neighborhood in a city with a low-crime rate. Finally, even if things fall through and I never own a home, I’m fortunate to have the kind of love I do in my life.
I may not ever achieve what many consider to be the real “American Dream,” but I have enough to get by. And that’s perfectly okay.