Members Cooperative Credit Union (MCCU) has announced a new, dedicated tiny home mortgage product.
Tiny homes, which often range in price from $40,000- $100,000, have gained popularity in recent years and have become one of the newest and most inquired-about housing options. MCCU’s said its tiny home mortgage is the first dedicated product known to be available through a locally based financial institution.
The tiny home is popular as a reduced-footprint housing option for young home-buyers, a low-cost option for snowbirds, an affordable housing option for those in financial need, and with Baby-Boomers looking to downsize as they enter retirement, the credit union said in a news release.
“Despite their growing popularity nationally, few financing options exist for these homes in Minnesota,” said Steve Glonchak, Chief Lending Officer for MCCU. “The most challenging part of financing is the appraisal qualification. Traditionally lenders use a market value approach, but with a very limited number of comparable properties sold, this approach doesn’t work. We’ve chosen to use the cost to construct or the purchase price as a valuation that can overcome this obstacle.”
While a number of communities already allow the construction of tiny homes, MCCU has also begun discussions with local municipalities that are interested in adapting building and zoning codes to allow for the building of these homes within their boundaries.
“There are two significant barriers to tiny home ownership: financing and outdated zoning and planning requirements,” said Glonchak. “MCCU wants to remove the initial financial barriers for potential tiny home owners by making financing options available in our communities.”