HOA Archives - Maura Allard Realtor

When it comes to buying a home, whether your first or tenth, understanding exactly what goes into buying it, especially when it comes to money, is crucial. Outside of the direct cost of a home, there are various fees associated with purchasing a home. Those fees can sometimes vary based on the offer presented to the seller, the current market conditions, and the type of home loan you decided to go with (and qualify for!).

Although it would be magical if all we had to worry about was the listing price, that’s just not the reality of the housing world. The good news is that my team and I believe in the power of transparency and getting you as ready as possible for the new big adventure in your life: a home purchase.

After you land on a favorable mortgage offer and solid preapproval, it’s important to remember that, although exciting, having a comfortable amount of money saved ahead of time will help you tackle all the fees associated with buying a home without the added worrying of scrambling to get your ducks in a row as you’re on the hunt for your dream home.

Let’s break down the costs associated with buying a home so that when you’re ready to step into the world of homeownership, you are ready and able to afford the home you adore.

1. Down Payment

A down payment is the amount of money you put down, upfront, on your total home purchase. It is deducted from the total purchase price at the time of sale and not part of your standard mortgage payment. Most home loans require a down payment of some kind. If you are opting for a conventional or FHA loan, a down payment is required. FHA loans require a down payment of at least 3.5%, while conventional loans vary based on property type, location, and loan terms. Conventional loan down payment amount is typically anywhere from 3% to 20%.

The only loans that do not require a down payment are VA loans (available only to military members) and USDA loans (used to purchase homes in rural areas as designated by the USDA).

It is a good rule of thumb to have about 10% of the total home cost saved for a down payment. If you spend less, great, as that can be used to cover other fees.

2. Closing Costs

Before you can get keys in hand for your new home, closing cost payout is required. “Closing costs” is an umbrella term used to describe all the fees associated with pulling a mortgage. Typically, they range from 2% to 5% of your loan’s principal.

Although different for every situation, they often include:

Credit check fee
Application cost
Appraisal
Home inspection
Underwriting fees
Title search
Title insurance
Transfer tax

In some cases, the sellers will cover closing costs (in partial or full) based on the terms of the final offer. Therefore, it is important to speak with your loan officer to determine exactly what fees you’ll need to pay out under your specific closing costs.

3. Homeowners Insurance

This type of insurance helps to protect you financially from unexpected events that could significantly damage your home. Think natural disaster, theft, or in-home accidents, like fire.

Homeowners’ insurance isn’t required by law, but most mortgage lenders require it. The cost varies by loan details and location and the options seem quite endless for coverage. We always encourage you to compare different options and rates to choose one that best suits your needs and budget.

4. HOA fees

If you’ve purchased a home within a designated community, there may be HOA or homeowner’s association fees you have to pay on a monthly, quarterly, or yearly basis. Although different for everyone, the specifics of your HOA requirements will be outlined in your homeowner’s purchasing agreement. Fees are extremely variable and are set into place by the homeowner’s association of your community.

Your dues cover specific services that the association provides, which may include security, a pool, a gym, or landscaping and maintenance.

5. Property Taxes

Like any big purchase, tax is something that comes with the territory. In most cases, property tax is included in your monthly mortgage payment but is separate from the interest and principal portions. Property taxes are paid for the entirety of homeownership and are based on the assessed value of your property.

There are various fees outside of the standard purchase price when purchasing a home to keep in mind. Although these are the most common and general fees, other fees could include home upkeep, renovations, or other non-standard items or requirements based on your unique home, location, or needs.

If you’re in search of your dream home and hoping to secure the funds needed to purchase, we’d love to help you through the process. Contact us today to start your journey to homeownership in New England.

When purchasing a home, there are many boxes on your checklist to mull through to ensure you are finding the perfect fit for you and your family. Aside from location, home size, loan details and wish list items you may be posed with the idea of a Homeowner’s Association (HOA for short). Understanding an HOA and determining if it is right for you is key to buying success.

What is an HOA?

In short, a homeowner’s association is a group established within a specific community that manages the common areas, community amenities and set of rules and regulations. The association is made up on member’s elected by neighbors within the community. HOA’s are most commonly found in condominiums, townhomes and planned single-family neighborhoods. Within HOA’s you can usually find a document known as the Declaration of Covenants, Conditions and Restrictions (CC&R). This document outlines the community rules and regulations that each resident needs to follow.

Is there a cost for HOAs?

Yes. Generally speaking, the more amenities, the higher the cost. The HOA fee is separate from your mortgage and covers the cost of the community upkeep and amenities. Fees can sometimes differ within a community based on home size and upkeep requirements for specific locations. In most buying situations, you’ll have the opportunity to speak to an HOA representative prior to purchase, so make sure to ask about fees, increases and coverage so that you have a good handle on what to plan for budget-wise.

What amenities are included?

Amenities are based on specific communities. Some include a gated entrance for added security, a community pool, tennis courts, a community center for use during personal gatherings, free events, lawn maintenance or golf course access. Lesser, yet still important, amenities that are normally included are trash and recycling pickup and additional guest parking lots. A full list of amenities should be included with each home showing.

Do HOAs impose restrictions on residents?

It’s possible. The CC&R outlines the rules and regulations of your specific community. Some HOAs are strict on things such as lawn care, exterior home décor, parking, and, even, things like whether or not a garage door can be left open during the day. Make sure to review the rules in detail prior to making a final decision on your HOA home purchase.

What are the biggest pros of HOAs?

HOAs keep things running smoothly within a community if they operate effectively. Their rules and regulations assist in keeping the community safe and clean. HOAs give you access to amenities normally not included with a standard home purchase. HOAs have been shown to increase your home value by as much as 4.2%.

What are the biggest cons of HOAs?

Depending on your viewpoint, the controls imposed by HOAs can be considered a con. If you like to be fully in charge of your home decisions an HOA may not be right for you. The additional fee may also be looked at as a con depending on your budget. If an HOA is run poorly, lack of attention to the CC&R, additional fees and mismanagement are con contenders.

Deciding whether an HOA is the right choice for you depends on your home buying requirements. If you are looking to be part of a community that has additional amenities an HOA may be a great choice in your home search requirement. Consider both the pros and cons prior to deciding how you wish to proceed with your next home purchase.