When you hear Homeowner Associations, you probably immediately conjure up images of old ladies with blue hair, sitting around all day, tattling on their neighbors for breaking the rules. Like buzzards waiting for something to die, they spy on you between their blinds and the minute you hang something from your balcony, even for a minute, they’re on the phone, getting you in trouble.
Okay, that may be a bit of a dramatization on my part. Homeowner Associations do actually have inherent worth. But what is that worth? Have you ever wondered what are the benefits (and real drawbacks) of an HOA? If you ever find yourself or a friend in the market to purchase a home or condo with an HOA, trust me, you’ll want to know these little tidbits. They can weigh heavily on your ultimate decision to purchase. Here are our top 3 benefits and drawbacks of a Homeowner Association (and their fees).
Benefits of HOA
Community and Safety
Homeowner Associations grew exponentially in the 1950s with many people moving to suburban neighborhoods. The associations were, and are, meant to create a sense of community where individuals and families can foster good relationships with their neighbors and create fun and safe communal spaces for all to enjoy. An HOA can help you get to know your neighbors and help create a positive and safe feel to your subdivision.
Amenities
Don’t have money to buy and maintain your own pool? No problem! Every month by paying your HOA fee you help fund community spaces like pools, clubhouses, and parks to play in. Every HOA offering is different, with some even covering part of your home insurance, water bill, cable, and even internet. Make sure to see what is included in the fee before you buy.
Less work
Some people love yard work, but in today’s fast-paced world, many don’t have time to mow their front lawn every week or so. The HOA helps with this by hiring landscaping companies to take care of communal spaces and keep the community looking good without you having to sweat over it!
HOA Drawbacks
Restrictions
Did you want to paint your house bright green? Sorry, but that won’t fly with the Homeowners Association. HOAs create rules about how houses should appear on the outside, where you can park, and even if you can put a TV dish on your roof. Some like these restrictions because they require conformity and a crisp feel to the establishment. Others find these restrictions irritating and overwhelming.
Can’t Opt Out
You don’t choose if you want to pay or not—it’s an obligation. Furthermore, depending on the rules of the HOA fees can fluctuate, so you may actually end up paying more next year than you did this, making budgeting difficult.
Financial Obligation
Some might see the HOA fee as just one more bill. Sure you get something out of the bill, but you don’t always choose exactly what that is. Maybe the HOA votes to change internet companies even though you like the old one. Maybe they impose new regulations on using the clubhouse that you don’t agree with. Considering the extra $200-400 you’re paying on top of your mortgage every month to the HOA, you might be able to afford a better home without an HOA that would better suit your particular needs.
Decisions, Decisions
So, is an HOA for you? Chances are, it depends! What kind of a personality do you have? How much yard work do you want to do? How do you feel about community meetings? Would you utilize common areas like pools or clubhouses, or do you prefer the comfort of your own back yard? Depending on your needs HOAs can be wonderful investments or money wasted. Make sure to do your research to see what’s included and ask your realtor for advice when considering a property with HOA dues.
Nice newsletter. Good article. Good information. Thank you. Carol
For conventional financing, borrowers with scores at 740 or anywhere above generally receive the same loan pricing (rate and cost). That being said, the better your credit the higher your chances of receiving loan approval with high debt to income (up to 50%) or high loan to value (up to 95%) which can be a major benefit when applying for a new loan. For Jumbo financing, borrowers with credit scores above 800 are generally rewarded with both better pricing and easier guidelines. There are no situations where better credit is a negative when obtaining new financing so we should all continue to strive to reach and then stay in the 800’s.
What are the advantages of a score over 800
Thank you Mike for this information. As a residential realtor the information that you provide is crucial to a successful transaction for my clients. You are indeed a pleasure to recommend to all of my clients. You are so professional, thorough, conscientious and pleasant to work with. !!
Hi Dane! Wanted to make sure I'm clear on this. Am I right in saying that on whichever remodel is done you still take a loss rather than an increase in value - the ROI will never exceed 100% of cost?