Homeowners associations can play a significant role in the homeownership experience, so homebuyers need to know more about them, especially if you wish to purchase a home in a community governed by one.
What is a homeowners association and what does it do?
A homeowners association is an organization that oversees community activities and sets and enforces HOA rules for homeowners. Homeowners in these communities also pay HOA dues, used to cover expenses like landscaping, maintenance and community amenities.
The areas of authority each HOA have varies from one community to another. It may include only community areas, such as sidewalks, neighborhood parks and entrance signs.
In other communities, the authority may extend to oversight of the condition and appearance of homeowners’ properties. The governance of properties might include paint and landscaping choices, lawn condition or structural integrity issues such as visible wood rot.
HOA fines
An HOA has the power to levy fines and even enforce legal action against a homeowner if they don’t pay their dues, follow community rules or resolve condition issues.
HOAs may also charge homeowners special assessments to collect funds needed to cover extraordinary costs, such as repair work expenses associated with a major storm.
Does being part of an HOA affect mortgage payments?
HOA dues are typically paid directly to the homeowners association, but there are some cases where fees are included in an escrow account due to the community or lender.
HOA fees are included in the lender’s debt-to-income ratio calculations, which show how much of a mortgage payment you can afford based on your qualifications.
Pros and cons of HOAs
HOAs typically exist to ensure your community’s appeal is preserved, which is a plus for your home value. An HOA community is usually associated with greater amenities, such as parks, neighborhood pools, walking trails, fitness centers and more. Homeowners associations can also step in to settle neighbor disputes when needed.
Fees can be expensive and can increase over time. In some communities, HOA rules can be extensive, making it hard to abide by every single rule and limiting your freedom, as a homeowner – and some HOA managers are also quick to report rule violations.
Do you have questions? Contact us today
There are plenty of considerations when buying a home, including homeowners associations. If you have any questions about homebuying or the mortgage application process, give us a call at 800.342.9278.
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