Buying a home can be an emotional process, and, one that’s not without a bit of stress. When it involves a second home, vacation property, or your primary residence that’s on the water, there’s a whole other dimension added to the equation. Many things will change when a home is lakefront precisely because of the water. While it’s nice to have the view and the ability to enjoy the lake, lenders and insurers will definitely take this into account.
You’ll have more to do than just house hunt when purchasing waterfront property because you’ll be quite keen about its resale potential, its risk of flooding, and, its history overall. Those things matter most and are the biggest factors you ought to be most concerned with in making your choice. This is a time to be methodical and really think about the future, taking as many scenarios into account as possible.
Getting a Mortgage for a Lakefront Property
Practically any kind of waterfront home will have special considerations to lenders and insurers. First and foremost, of course, is the risk associated with flooding. Another consideration is who manages the lakefront, whether or not there’s an association, and what kind of purchase it is, such as a primary residence or vacation home. Because these type of properties are typically more expensive then residences which are landlocked, the amount you borrow will be large. That amount also constitutes more risk to the lender.
“With any home purchase, it’s important to figure out exactly what you want and need in a home to make smart decisions. But a waterfront home is not just any home. Special considerations need to be taken to ensure that your property will suit your lifestyle and let you enjoy the activities you love.” —HGTV.com
You’ll have to address many things, like a survey and elevation certificate. This will show where the property lines run and how far above the waterline the property is, two things that will be of great interest to mortgage companies and homeowners’ insurance companies. Watershed areas are another big factor because these can cause problems with utilities. Associations are yet one more of many factors, especially to the lender as this will increase your obligation.
Tips to Find the Right Lakeside Home
Lakeside homes are wonderful because you’ll have great recreational opportunities to take advantage of, from boating to sightseeing, there will always be something to do. The mistake you don’t want to make is to purchase buyer’s remorse, which is unwittingly done in some cases. Here some steps to take when buying a home on a lake:
- Consider the property first, the home second. From the lake management, to the property lines, to the homeowner’s association, and local codes, the property itself ought to be your primary concern, while the home should be second. The property itself is the most valuable asset, and, if there are building restrictions or other factors which compromise the value or could in the future, you should know about those.
- Make a decision based on use. Think about how you will use the property. If it’s going to be a second home, learn about renting it out and the tax implications. If it is going to be your primary residence, you’ll be smart to learn about things such as building codes, riparian rights, lake management, boat mooring, and more. How you use the home will be an important consideration about which property to buy.
- Learn about the history of the home. Once you know about the land, you should learn as much as you can about the home. What’s the condition of the roof? Is the basement finished and usable for living space? How far from the water is the home? Has it ever been flooded? Will it withstand inclement weather? What are the chances of it flooding if the lake rises? Does it provide enough privacy? How close is the nearest fire station? What amenities are nearby?
- Learn about the neighborhood. You should conduct a bit research into the surrounding area. Speak with neighbors and visit the property at different times on different days. Get to know the area more intimately so you won’t be subjected to unpleasant surprises later.
Finally, learn about the lake and what is and isn’t permitted. There might be restrictions that will present a problem. Local codes and laws are something you ought to know about before you commit to a purchase.