Buying a House on the Lake | Chappaqua Homes

Many people dream of finding the perfect lake house. But once you’ve found it, is it really that easy to buy and finance the home? It is if you follow these four steps.

1. Decide how you will use the home

Before estimating your lake house purchase costs, you need to consider how you intend to own and use the property. You have three options:

• Primary residence. You can buy for as little as 3 percent down (if the loan amount doesn’t exceed $417,000), and you’ll get the lowest mortgage rates for this type of use.
• Second home. You can use your lake house with your family and friends, but lenders won’t let you rent the home. Mortgage rates are the same as primary residences. Most lenders require as little as 20 percent down for a second home. You qualify for the loan using your full primary residence housing cost plus your full second home cost.
• Investment property. You’d rent the home, plus use it when it’s not rented. Rates are .25 percent to .375 percent higher than primary residence or second home rates, and down payment requirements typically start at 30 percent. But you can use rental income to help qualify for the mortgage.

2. Understand the total cost of owning a lake house

You can determine what you can afford in seconds. Then you’ll find a lender and have them dive deeper into:

• Cash available for down payment, closing costs, and reserves.
• Total monthly cost of your existing home, plus the total monthly cost of the lake house (including principal, interest, taxes and insurance for both homes).
• Total cost to manage the lake house, including costs unique to a lake house. One such cost is flood insurance, which is an additional insurance fee on top of your normal homeowners insurance.

You also need to consider budget items that lenders don’t use in their qualifying calculations, but that are still very important for your own financial planning:

• Total cost for gas, electric, cable TV, and internet.
• Total cost for furniture and housewares. This is especially important for your budget if it’s a second home or investment property.
• Total costs to travel to your lake house for your desired number of visits each year (if it’s not a primary residence).
• Total cost of outdoor gear: kayaks, paddle boards, boats, jet skis, etc.
• Total cost of property maintenance including dock upkeep, cleaning, and landscaping.

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http://www.zillow.com/blog/how-to-buy-a-lake-house-171877/