Before you purchase or move into a new home, you should check first if your house is part of a community that belongs to a homeowners association (HOA) because this will spare you from surprise dues or fees that you’ll be asked to pay monthly (or at regular intervals), and you’ll also know things that you’re allowed to do and what you shouldn’t do if you want to avoid trouble.
To help you get started, here are five things you should know about homeowners associations, with a particular focus on the one thing that could affect your lifestyle: fees.
1. Fees vary from HOA to HOA
HOA fees or dues largely depend on two things: location and services. As with real estate, the location of the HOA greatly affects how much each HOA member will be charged for their regular dues. Suffice it to say that the more expensive the location, the higher the fee.
Additionally, the amenities and services that the HOA provides dictate the amount of HOA dues. Fees could be anywhere “between $100 and $700 per month.”
2. Special assessment fees may be required from time to time
Depending on the HOA’s financial structure, homeowners may be charged an additional assessment fee from time to time. Essentially, these charges may be due to major repairs that need to be done on the community’s common areas or facilities and the HOA doesn’t have enough funds to cover the expenses. Check your HOA’s financials for such emergency expenses to see if these are already covered in the monthly dues.
3. Mortgage lenders consider HOA fees
Believe it or not, mortgage lenders (banks, generally) will look into the HOA and your fees before approving your mortgage application. Mortgage lenders consider how the HOA dues could affect your finances overall, seeing these as critical factors that could affect your ability to pay your mortgage dues. In general, the higher the HOA dues, the lower your mortgage loan (so you’ll have a lower monthly mortgage due).
4. Covenants, Conditions & Restrictions
One of the most crucial factors about HOAs that homeowners neglect to check before moving in is the Covenants, Conditions & Restrictions (CC&Rs) document. The CC&Rs basically dictate what you can and can’t do on your property, and the community. Some HOAs have exaggerated restrictions like dictating the accepted paint on your home’s exterior walls. Be sure to check every condition and restriction to avoid being penalized or worse, kicked out of the community.
5. Conflict resolution
In relation to the above, check to see how the HOA resolves disputes or conflicts between neighbors, as well as the fines or penalties given for violations of the rules. As mentioned above, homeowners may be charged a fine or, in extreme scenarios, kicked out. Some HOAs even attach a lien on, or foreclose, the property.
Feel free to send your questions online or call (888) 828-9444 for questions or inquiries.