You may have been searching for real estate to buy when you finally found the perfect one, except you found out one small detail about it that has you questioning your purchase. You discover that the home you found is part of a homeowner's association (HOA). If you're unfamiliar with homeowners associations, here are three things to understand before you make an offer on your potential dream home.
There Are HOA Dues
Part of being in an HOA is the financial commitment that is involved. You will be required to pay your dues every year for simply owning a home in the HOA. These dues never go away, even if you no longer have a mortgage. It's also possible that dues will increase over the years as the prices for community services increase.
Be sure to understand what those dues are and factor them into your budget. If you are worried about covering the annual dues after paying for the mortgage, insurance, and property taxes, this may be a sign that you should look elsewhere for a home.
There Are Restrictions
When you belong to an HOA, there will be restrictions placed on what you can and cannot do with your home. Unfortunately, these restrictions are also legally binding, since you agree to them when you buy the home.
You'll want to completely understand all of the community bylaws before you make an offer on the home. If you're comfortable with what they ask of you, it's possible that the HOA could be a good fit. Keep in mind there can be rules regarding the maintenance of your lawn, the color of your fence, and even the type of grass that you have.
There Are Benefits
An HOA is not always a bad thing. In fact, there are benefits to being in one that you may not be aware of. One of them is the potential to get a reduced rate on your insurance. An HOA can buy a group policy for the community, and by having everyone use the same insurance provider, they will pass along some savings.
The HOA rules also help maintain a prestigious community. By having everyone in the community meet basic standards, the HOA could make the resale value of your home higher than what it otherwise would be.
For more info on homeowner's associations, speak with your agent. If they have helped sell or buy a home in a particular community, they can help key you in on the main things to be aware of with that particular HOA.Share