Understanding Home Owner's Associations
Posted by Eric Skates on
When you're looking to buy your first home, the search starts wide. You want a certain number of bedrooms, yard space, and specific amenities within a mile radius of your workplace. Maybe you're looking for a newer home in a good school district or a home with a yard big enough for your dogs. Some people want tiny homes, some want grand estates. Whatever you're looking for, soon you will have sorted through all the readily available property listings and have a short list of ideal options. Many modern buyers are prepared with plenty of real estate advice available online. You know to get a complete inspection and have a collection of questions to ask about how well the plumbing works, how big a down payment is needed, and whether or not the roof is well configured for solar panels.
However, one question few people remember to ask before setting their sights on a home is whether or not there is an HOA to worry about.
What is an HOA?
HOA stands for Home Owner's Association and many urban and suburban neighborhoods have one. They are often arranged by the company that originally build the neighborhood and membership is passed down through home ownership. By buying a home in an HOA neighborhood, you automatically join the association. As a member, you get voting power in neighborhood concerns and an opportunity to sit on the governing board. Of course, it also comes with certain restrictions which are meant to protect the entire neighborhood's property values.
What Comes With an HOA?
Every HOA is a little bit different because the rules and procedures are made up by each unique group of homeowners, often over the course of several decades. However, there are a few consistencies between most HOAs that will help you understand what you could be getting into. First, HOAs usually have an annual membership fee which pays for things like neighborhood landscaping along with maintenance for any local playgrounds or other public neighborhood areas. After that, you can either start voting and get involved or your participation can be minimal as long as you follow the neighborhood rules.
Know Your Neighborhood Rules:
The rules or CC&Rs (Covenants, Conditions & Restrictions) of an HOA has been decided by the homeowners for decades which can be good or bad depending on what rules they voted in and which ones are actively upheld by the association. Most of these restrictions will be about keeping your exterior home appearance in line with everyone else, that is maintained, in muted colors, approved materials, and modest designs with no pink flamingos in the yard. However, it can get out of hand. Some HOAs, for instance, try to limit an owner's number of pets, whether or not they can rent the home, and even how many basketball goals can be on a single street. Many of these unreasonable rules also favor owners who have been there longer, like those that only allow a certain number of rental properties in the neighborhood so early buyers take all the spots.
What You're Getting Into:
If you have a new home in sight and are ready to buy, just do this one final check. Find out if the home is in an HOA neighborhood. If it is, this is probably not a deal breaker. Take the time to read the CC&Rs and talk to another local owner or two to find out what it's like to work with the HOA. If the CC&Rs don't ban anything you intend to do and the other residents assure you that fees and rule enforcement is reasonable, then the home is perfect and you might even enjoy being part of an HOA.
Part of purchasing a home is learning about homeownership, and here at Equity Prime Mortgage, we pride ourselves on being a resource to you! If you're ready to start #YourLoanJourney with us click here to start the pre-qualification process or click here to contact us today and learn more about what loan programs may be right for you!