Any creative ideas of home financing - somewhere between tiny home and minimalist?

Question

Hello,

I am at the cusp of finishing a medical education program, with a significant income increase on the horizon. My wife and I will be education debt free after significant work and serendipity. That said, we are hoping to homestead in a slightly more expensive area of the country. She doesn't want to live in a tiny house as we start a family, yet we appreciate the minimalist approach and would foresee a smaller square footage of our home (with the exception of some land). What options exist for debt free (or debt reduced) living? Or are the tax benefits of a mortgage "worth it"? I'm curious to hear thoughts in both directions.

Thanks!

Brad Jacobson · Answer

Tiny homes typically mean you'll just pay twice as much per square foot.  They also don't make as good as an investment as a more expensive, traditional single family that will appreciate 3%+ per year.

The best way to live frugally but comfortably is to max out your pre-approval and buy a multifamily property or single family with an ADU (accessory dwelling unit). Have your tenants pay your mortgage for you.

My wife and I live in a nice home in a nice neighborhood but we rent out a portion of our basement as an Airbnb and it almost always pays our entire mortgage for us.  Plus, we're getting loan pay down and appreciation on a $500,000 home.

Hopefully that makes sense!  Good luck!

Carini Rochester · Answer

Debt free:

Rent. Don't purchase the house/property.

Any tax advantage to the mortgage comes from the interest being subtracted from your income, but this would be outweighed by the interest you pay being greater than the tax that you save. Also, we live in a time of a fairly high standard deduction, so you may not even get to deduct any additional for the interest, that depends on your exact financial situation.

@Scott E. really said it about as accurately and concisely as possible.

Scott E. · Answer

Very confusing post. But if you want to exist debt free, just pay cash and buy a house with no debt.

Vanessa Ivonne Hernandez · Answer

An option: purchasing a property with an accessory dwelling unit (adu) for your family. So you can have advantage of living in a conservative adu space while working towards your financial freedom with rental income from the primary residence.

Good luck on your journey!

Any creative ideas of home financing - somewhere between tiny home and minimalist?

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