Understanding Homeowners Association Fees
The cost involved in purchasing a home involves more than the down payment, interest rate, and closing fees. Depending on the type of home or area you buy in, there can be the added expense of Homeowners Association (HOA) fees.
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The HOA fees are commonly determined during the developer’s planning process. Clearly stating what areas of the building or subdivision will be “common areas” that will require regular maintenance and upkeep will help determine the budget that will be passed along to individual home owners. While developers want to keep the fees as low as possible, it is also in their best interest and yours to be realistic about the expense involved in the upkeep of the building or subdivision.
HOA fees vary greatly, but typically cover items such as, landscaping, pool maintenance, clubhouse, hallways, and gyms. It is important to have clarity on the monthly fee, as the added expense of monthly HOA fee can alter the amount that a bank will lend you.
We currently live in a subdivision that requires a monthly HOA fee of $60/month, but a recent conversation with my Sister-in-Law revealed that they pay upwards of $700/month in fees. Shocked by the amount, she explained that it covers maintenance on their individual home to include painting and roofing. While this may be a reasonable expense for some, for others it can make the home fall into the “unaffordable” category.
HOA’s also set the guidelines for the care and usage of not only the common areas, but also for you as an individual home owner. Often times there are restrictions on exterior paint choices or whether or not you can park a motor home in your driveway. Our HOA issues citations for garbage cans that are left in the front of the home for more than 24 hours, and dictates the type of mailbox you may install. While the idea behind these restrictions is to keep the value and appearance of the development/building up, many homeowners may find these rules stifling.
Before you fall in love with that upscale condo complex or single family home in the swanky subdivision, be sure to inquire about the existence of an HOA and the subsequent fees and restrictions.
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