5 Reasons to Purchase a Lake House as a First Home

For Sale Sold Sign lake house as a first home

Imagine that you’re looking to buy your first house or apartment. More than likely, it’s in an urban or suburban area, and the most picturesque views that you’ll get is of your neighbor’s backyard or the recycling bins outside. But of course, it has its benefits —  it’s near work, it’s close to the city, and it’s just practical. Perhaps thoughts of a luxurious lake home seem more like a pipe dream than a reality. Something to save up for and wait several years before even thinking about it. But who says that you have to postpone your lakeside living fantasies?

According to CNN, there’s a rising trend of people buying vacation houses as a first home. For many new homeowners, this method is the ideal way to obtain real estate without sacrificing all their assets in one purchase as you might in an expensive city. From saving money to stressing less, there are several perks that come with buying a lake home as your primary investment property. 

1. Save Money

Lake George, NY
Photo courtesy of Lake George.

It’s no secret that major cities like New York or San Francisco are very pricey for small units of space. Not surprisingly, both were ranked among the top 25 most expensive cities in the U.S. For good reason, many people are now opting to buy properties at vacation spots adjacent to these major cities while continuing to pay rent for their small urban apartments. This way, new homeowners can get the best of both worlds — an investment in real estate while also living in the city. For example, New York dwellers might choose to buy a house on Lake George, about a three hour drive from the hustle and bustle. When the work week gets stressful and a weekend retreat is in the cards, there’s nothing better than a nearby destination that you can proudly own. Buying a lake house as a first home solves this issue.

2. Rent it Out

Person handing house keys to renters

If you aren’t planning to live at your lake house full time but still want to invest in the property, there’s a great opportunity to rent your vacation home to others who are looking for a weekend getaway. Since it’s going to be left unoccupied when you aren’t there, you might as well be making a profit. According to the data studio Priceconomics, AirBnb hosts make $924 per month on average. By including your lake home on a platform like AirBnb, you can offset the mortgage cost each month and make your investment a little more affordable. Plus, with amazing views of a nearby lake and serene nature surrounding the house, you’re bound to get plenty of booking requests.

3. Stress Less

Lake House at Bulow lake house as a first home
Photo courtesy of The Lake House at Bulow.

When it comes to buying a house, there can be a lot of pressure to make sure it’s the right decision. After all, you’re placing roots in a space that you expect to enjoy for years to come. But if you’re living in an expensive city, the stakes are high and dropping more than $150,000 on a downpayment (based on the average listing price of $779,000 in New York City) is not a decision to be taken lightly. If you’re ready to be a homeowner but can’t commit to city prices, choosing a more affordable vacation home is a great way to lower your stress and buy some time before investing in city property.

4. Invest in the Future

Grandfather reading with grandson at lake

If retirement is already on your mind, imagine the kind of place where you’d like to spend the years following your career. Likely, it’s a place where relaxation is the name of the game. By investing in lake house property early on, chances are that you’ll be far enough on your mortgage payments where you can retire comfortably at your vacation home. Not to mention, you’ve secured a vacation destination and weekend getaway for all those pre-retirement years when you need to take a break.

5. Enjoy the Scenery

Buying a lake house as a first home
Photo courtesy of Bontena.

Of course, the decision to buy a vacation home as a first home comes with a few considerations. For example, the upkeep is your responsibility and this may be harder to keep track of when it isn’t your primary residence. However, those who have taken the plunge and bought a vacation home while renting in the city say that it helps to keep close ties with neighbors who can alert you if anything suspicious is going on. And if your property is just a few hours away, you should be able to make it for a maintenance day one weekend a month. If you decide that you’re ready to take on the homeowner responsibilities, consider all the benefits of making your first home one with an incredible lake view. 

The Benefits of Paying Cash for a Lake Home

Pay in cashIt is not often that you are put in a position where you can purchase a lake home for cash. The money is typically saved up over a period of time. It could also come from an inheritance or even prize winnings. No matter how you have been able to acquire the money, you can be sure that purchasing a new lake home with cash is probably your best option.

1. No monthly payments.

One significant benefit of paying cash for your lake home is that you will not have a monthly payment to budget into your finances. You will have the amount of a monthly house payment freed up every month. This alone is a good benefit to pay cash.

2. No interest to pay.

When taking out a loan to purchase a lake house, you will also end up paying thousands in interest. When you pay for the home all at once, there is nothing to build interest on. Therefore, when you pay for it in one lump sum, you will pay a lot less than you would have.

3. Sellers love cash.

When a seller is faced with an option of waiting for money through a bank loan or a lump sum of cash from a serious home buyer, they will give the cash buyer a deal in order to receive a large amount faster.

4. Lower closing costs.

When a buyer purchases a lake home with cash, then the closing costs will be lower than what it would be when using a loan. You can even negotiate that the sellers will pay closing costs since you are paying in one lump sum of cash.

5. Housing market fluctuations will not affect you.

Since you are paying in cash, the deal is done. Those who use a loan to pay for a loan will be subject to the market fluctuations. These fluctuations affect house payments.

6. Closing time is much faster.

When you don’t have to be subjected to the forms that the bank requires, and you don’t have to wait for the decisions, communications, or other aspects of including middlemen, then you can close on the home a lot faster.

7. Better financial standing when it’s your second home.

Yes, it was mentioned that you would not have a house payment for this home. But it is also a bonus benefit when this is your second home. It will cut the cost of having multiple homes. The payment that would have normally been paid every month will be used to pay bills for when you occupy the home and not when you are away.

Although there is a list of benefits listed here, there are plenty more. It is smart to pay cash for a lake home all at once should you be in the position to do so. You save money in so many areas that it is financially ideal to do so.

Great Closing Gifts for Closing on a Lake Home

GiftThe previous owner can thank the new owner by providing him with a closing gift as a sign of respect for the transaction done. In this article we will provide some great examples for closing gifts for closing on a lake home.

Spiritual gifts

Give a book that is all about love, joy, happiness, and belief as a gift to the new owner to congratulate them on a new start in an interesting way.

Dog and cat gifts

Families love their four legged animals and a gift for them would be appreciated deeply from all family members, in which the dog is included as well. You can buy dog and cat gift stacks with high quality products, cookies, doughnuts, and everything that pets will love.

Respecting new owner’s dog means you respect them as well. That is why this closing gift is highly recommended.

Patriotic gift

American FlagEvery American homeowner should have an American Flag in their home. That makes it a perfect closing and housewarming gift. Make sure the quality of the flag is high.

This gift is wonderful because everyone seldom thinks about buying it. The price is not high either; less than $50.

House portrait

If you really want to impress your client with a custom and great closing gift, provide them with a painting of the house where they are moving in.

Sign your name in the portrait and now it becomes a marketing piece. It is really impressive and amazes the clients every time. There are some websites where you can buy these portraits such as “CuteHousePortraits.Com”.

Night out

Rather than providing a materialistic gift, why not go out for a dinner and enjoy the night?

Make all the reservations for your dinner. Arrange limousine to pick you and your client up. Lastly, ask the restaurant staff to send a thank you letter to the client in your name. It would be truly memorable.

New experience

Similar to the last one, this is not materialistic but an activity. What if your client has everything and you do not know what to give to them?

How about for a new experience for which they will talk about years after? Choose a guided fishing trip on the lake or a sunset cruise on a sailboat.

Not only will it be an enjoyable outing, it will also help the homeowner to learn more about the lake that they will be living on!

Closing gifts are like the concluding remarks of an essay. If done properly and effectively, you will impress your audience, who in this case would be the client. It is the last thing they will see or hear from you so put some effort into it and you are almost guaranteed future referrals.

Understanding the Basics of a Mortgage

There are a few options when it comes to taking out a mortgage. No matter what type of loan you choose to get, you need to properly research it so you fully understand the terms and conditions.

You will also want to research your lending institution to ensure they are a solid financial center and to learn whether they deal with customers properly.

Types of Mortgage Loans

One type of loan you may not know about is the 50-year loan. As the name connotes, you can make payments over forty to fifty years for your lakeside home.

While it feels like you are making payments for your entire life, it does give you the opportunity to lower your payments each month to a more affordable rate.

The most common type of mortgage is a classic 30-year, fixed rate, amortized loan. This is where payments first go towards interest, then later towards the principal. Also popular is the same type of loan paid back over 15 years. This reduces the overall amount of interest you pay over the life of the loan.

All loans are evaluated for whether they conform to the Fannie Mae/Freddie Mac underwriting guidelines. If the loan meets their terms, it is called a conforming loan. If it doesn’t, it is a non-conforming loan.

The typical amount that qualifies as conforming is under $417,000, except in Alaska and Hawaii where the amount is more. This amount can change based on the changes in the market.

Non-conforming loans will typically have a higher interest rate. So, if you don’t have to have such a large loan amount, you can save significant sums over the long term.

Who backs the loans?

A conventional loan is not guaranteed by the government, but an FHA (Federal Housing Administration) loan is. Some loans are also issued by the Veterans Administration for veterans to be able to get an affordable home loan when they no longer want or qualify for base housing.

What should I steer clear of?

Some of the more questionable types of loans include the 5/1 adjustable-rate mortgage, which las a low, locked in rate for the first five years. But, after that the rate varies. In many cases this leads to a dramatic increase in your monthly payment as a result of a higher interest rate.

One type of loan that was more common pre-recession is a zero-down loan, leaving the entire amount of the home value to be financed. The risk from these types of loans was great, and defaults on them comprised one of the triggers of the great recession.

If you are interested in taking out a mortgage to either buy a vacation retreat or for your first home, be sure you talk to a financial expert. They can help evaluate your situation and help you determine how much you should try to get a loan for.

Matching your home to the amount you can afford is a science, but it’s a step well worth taking.

Should I Buy A Lake Home or a Lake Cabin?

Lake Home or a Lake Cabin | Lake Homes Realty | Hendel Homes
Photo courtesy of Hendel Homes.

Deciding whether to buy a lake home or a lake cabin can be a very difficult choice to make. Trying to weigh the pros and cons of either choice can help with the situation, as well as taking into account other factors such as price, area, size, and a number of other things.

Splitting up both a lake house and lake cabin into a pros and cons list, which highlights the advantages and disadvantages, gives you something akin to the following

Continue reading “Should I Buy A Lake Home or a Lake Cabin?”