A Homeowner’s Association (HOA), is an organization that maintains and regulates the atmosphere in a community. They help ensure that the community looks its best. At times, an HOA will spare you some responsibilities, but it may also come with some obligations. If you’re considering a home within an HOA, here are some factors you’ll want to consider when making your decision.
- Fees Range
- Before purchasing a home with an HOA, you’ll want to determine the fee amount. Most fees vary due to square footage, location, orientation, etc. Ask your real estate agent to help you identify this amount on the property’s listing.
- Additionally, you’ll want to research how often fees increase. Typically, this happens on an annual basis.
- What you get varies
- Your HOA determines what is and what is not included with your HOA fees. Review the list of amenities and services that your HOA covers. Will you have to pay for garbage pick-up? Is yard maintenance included? What are the community’s amenities? Think pool, tennis court, gym, etc.
- Code of conduct and restrictions
- Each HOA’s rules and regulations are unique. Before submitting an offer, take the time to review the covenants. Once you become a member of the community, you’ll be expected to abide by the rules. For example, the code of conduct may limit how tall your grass can be, door colors, pet breed restrictions, etc.
- Fees and your mortgage approval
- When considering a home with an HOA, keep in mind that your loan officer will factor the impact of the HOA dues into your financing pre-approval. Just as property taxes and homeowner’s insurance are factored into your monthly housing expense, so too are your HOA fees. Higher HOA fees could limit the price point of homes you qualify for or affect your comfortable monthly budget. As an example, you would need to spend about $10,000 less on a home with a $50 HOA fee to maintain the same housing expense as a home with no HOA.
- The bottom line: if you’ve found a home with an HOA, contact your loan officer to update and discuss your mortgage payment.
Living within an HOA community can be a blessing if you’re looking for a neighborhood with perks and less maintenance. It can also be troublesome if you want to make home ownership decisions that conflict with the HOA’s code of conduct. Weigh the pros and cons and speak with your team of professionals (your real estate agent and loan officer). They’ll help you navigate through the process.