The idea of owning a lake house is exciting to so many people — who wouldn’t want to experience boat rides, gorgeous sunsets, and a place for your friends and family to gather?
However, lake houses also come with many additional costs and challenges, including high maintenance costs, property restrictions, high insurance costs, and a lack of privacy. You’ll need to consider whether these negatives outweigh the benefits, or if you’re willing to take on the additional work.
Lake houses are prone to needing more maintenance and repairs than other homes. They’re typically nestled between many trees and the shoreline, so houses are exposed to mold and mildew from the moisture (especially if they’re a lake with high water levels) and potential roof damage from trees.
Any waterfront property will also endure some amount of wind or water damage during storms, resulting in the potential need to repair windows, siding, retaining walls, and landscaping.
While living on the lake is undoubtedly beautiful, it can also be extremely busy. Most lakes are public property, so anyone can swim, boat, or kayak around them. It’s common for lakefront homeowners to frequently see people on the lake just outside of their homes.
It can additionally be quite noisy, especially if the home is on an open area of the lake. Since noise travels over the water, you can expect to hear whoever is on the lake near your house.
There are two reasons why your home insurance will cost significantly more if you live on the lake. The first is because you need flood insurance. Most mortgage lenders will require you to obtain flood insurance before they will approve your mortgage (especially if you’re located in a federal flood zone). Flood insurance can cost around $900 per year. However, you may be able to avoid flood insurance if you buy a home that is several streets away from the lake, instead of being a lakefront property.
Additionally, standard property insurance on vacation homes tends to be higher than it is for your primary residence. This is because the mortgage lenders assume you won’t be home as often, and therefore your property is more likely to sustain damage or experience theft (since you won’t be there for regular upkeep). The average cost of vacation home insurance is between $2,000 and $3,000 per year but varies greatly based on your credit, where you live, and the age and condition of your home. The insurance cost may be even higher if you plan to rent out the property to others.
Mortgage lenders hold buyers to higher standards when approving their financing options for a lake house. This is because lenders want to ensure that you’ll be able to cover an additional mortgage payment if you already have another home.
Mortgage lenders typically won’t approve your loan unless you put at least 10% to 20% down. You also need to have a high credit score (at least 680), and vacation home loans may also come with higher interest rates.
Since lakes are almost always public property, the government may own the area right next to the water. This means that if you buy a lakefront home, you will inherit any lease that is already in place.
It’s very important to ask whether the property has a lease before buying, so you know whether or not you’ll own the land on the water. If there is a lease in place, make sure you understand whatever costs or restrictions and easements are associated with it.
Most lakefront homes are subject to restrictions by the government, an HOA, or a governing board for the area. These restrictions typically require you to get permits or special approval before doing any construction or additions to your property. Additionally, you may not be able to remove or cut back trees or shrubs that are close to the water.
In addition to regular house maintenance, you’ll also need to maintain and repair the boat and dock. (If you have lake access, you’ll probably want to own a boat). The initial cost of these items varies widely, but you can expect to pay up to $40 per square foot for a new boat dock and anywhere from $10,000 to $50,000 or more for a boat. You’ll also need to cover the cost of gas and repairs for the boat and dock.
This goes without saying, but if you’re buying a lake house as a second home, you’ll have to manage both properties. This means paying both mortgages and insurance premiums on-time and scheduling regular landscaping, cleaning, and pest control. If you plan to rent out your lake property when you aren’t there, you’ll also need to manage bookings and guest communication.
Lake houses are located in damp, wooded areas, so you’ll always need to contend with pests when visiting your house. Mosquitos, other bugs, and snakes are among the more common wildlife you may find near your home.
Related: A guide to pest inspections
Ultimately, you’re the only one who can decide whether buying a lake house is worth it. Lake houses provide beautiful scenery and plenty of water activities for you and your loved ones. They also make great investments since lakeside properties are always in demand.
If you’re willing to take on the challenges and maintenance associated with owning this type of house, then buying a lake house can pay off dividends for your leisure, and maybe even for your bank account.
If you do decide to purchase a lake house, it’s important to choose the right area. Here are a few things to consider when making your decision:
The best way to find a lake house is to work with a real estate professional you trust. They will be able to find prospective properties that fit your needs and guide your decision-making. Plus, experienced real estate agents have years of successful negotiation practice and they’ll know what questions to ask (so you won’t end up with any negative surprises after moving in!).
Once you know which lake you want to buy at (or once you’ve narrowed down your search), consider reaching out to a real estate agent to get started.
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