I’m sure you have heard of a homeowners association (and may remember a few overdramatized CC&R references in pop culture — no stepfords, monsters, or ninjas in reality, I promise. Okay, I really can’t promise on the ninjas.) — there are more than 350,000 HOAs, representing some 40 million households nationwide. So, just a few then.
But beyond the fictionalized accounts, do you know what an HOA is or what it does? It’s much less daunting than it seems, I promise! A homeowners association is generally connected with a community, subdivision, or complex, which provides a set of guidelines that the residents must follow. There are fees that you, as an owner and resident, are responsible for, which aid in the upkeep and maintenance of the property. The benefit here — less to do on your end, more time to concentrate on other aspects of life, and more access to amenities. Sounds great, right?
Before you go rushing headlong into one of these agreements, let’s take a hot second and make sure you know what’s up. Knowledge is power!
- Membership is Mandatory – Joining an association is not optional, you are essentially buying into the community and the membership is mandatory, as is paying any fees. This isn’t like joining a gym and then never going (yes, we’ve all been there!). You are legally obligated to pay the required dues, regardless of how you feel about how they are used.
- The Lowdown on CC&Rs – Back to our old and somewhat scary sounding friends, the CC&Rs (Covenants, Conditions, and Restrictions). Much like the fees, you are also obligated to follow the guidelines established by the community. If not, there may be fines or penalties for violations that could, ultimately, increase the cost of your home ownership. Or if the fines are unpaid, it could send your home into foreclosure — these aren’t unpaid parking tickets, my friends. So before you commit to a home that has an HOA, it is important to make yourself aware of the rules and expectations. If you are incredibly attached to your flexibility as a homeowner — love some DIY, want to paint polka dots on your house, or fill the lawn with flamingos — perhaps an HOA is not for you.
- Ask What Items the Fees Cover – Let’s get back to those fees. In addition to asking to see what guidelines you are expected to follow, it is a good idea to ask what the fees will cover. This could be anything from tennis courts, swimming pools, or playgrounds, to elevators, stairways, or unit maintenance. The fewer surprises the better!
- Impacts On Your Finance – There are two way in which HOAs can impact your finances, both positively (YAY!) or negatively (sorry). Properties that are part of an HOA tend to have a higher property and resale value. On the other hand, those fees we’ve been talking about? They have an impact on your loan financing because they count toward your debt-to-income ratio.
The takeaway? Know what it is you are signing up for. Are rules and regulations your thing? Will you be able to afford the extra fees on top of your mortgage? Don’t be afraid to ask questions and ensure you are comfortable before making a commitment.
Anytime between “now” and “right now” is a good time to take action on shaping your best life, and that includes where you live. Let’s get the ball rolling on your next steps.
(702) 374-6807. Or drop me a line here.
