What is an HOA?

When you’re ready to start house hunting, you’ll likely come across homes in neighborhoods that have a rather consistent and harmonious look. It’s a good guess that these homes are part of an HOA, or Homeowners Association. What is an HOA, you ask?

An HOA is an organized group of homeowners within a particular subdivision, planned community, or condominium who create and enforce rules for their properties and residents. There is typically a board of directors who will hold regular meetings to discuss budgets and review rules and regulations. If you agree to live in an HOA community, those rules are legally binding.

How much are HOA fees?

Members of an HOA are required to pay dues on a monthly, quarterly, or yearly basis. They can range in cost from $50 to thousands of dollars, depending on the area and living situation. A community that offers a bunch of amenities will have higher fees than one that does not.

The fees you pay will cover the costs of varying things. Some communities might offer a pool or clubhouse, 24/7 security, trash pickup, a state-of-the-art gym, or even landscaping. It could also cover snow removal or emergency repairs. You should ask for a report of how fees are disbursed for a better understanding of what exactly you’re paying for.

You should be aware that an HOA can raise its fee. Make sure to ask what projects are in process and if there is an emergency fund before making a decision. If they don’t have a reserve fund, you could be on the hook to pay extra or raised fees to fix something unpredictable, such as a roof on a communal building after a storm.

Homes in an HOA are held to a higher standard than you might find elsewhere. The value of your property can increase because the community is going to remain visually appealing; lawns will be mowed, no scrap cars in the front yard, etc. Any issues you have regarding a neighbor can be handled through the HOA rather than personally getting involved. However, an HOA can become a nuisance if they are poorly managed or are extremely limiting.

Every HOA has different rules, known as covenants, conditions and restrictions, or CC&Rs. Depending on the conditions, you might not be able to make changes to your home that are seemingly insignificant. This can include painting your home a new color, installing solar panels, making renovations, or even changing the color of your front door. You might have to keep your lawn manicured to a certain length or watered even during a drought. Review the CC&Rs so you know all the details before you make a final decision.

When looking for your future home, you should carefully weigh the pros and cons of living in an HOA. Make sure to consider all factors, including costs and rules, to help you determine if this is the right option for you.

If you have questions about HOAs or the homebuying process, contact one of our Licensed Mortgage Loan Originators. If you are ready to begin the process, click here to get started!

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