Understanding HOAs: Is it Right for You?
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.