You’re searching for the perfect home to buy, but you keep coming across sky-high HOA fees. Rather than risk looking silly and asking your real estate agent what an HOA fee is, you go to Google for answers. Well, you don’t need to look any further. In this guide, you’ll find everything you need to know about HOA fees: what they are, how they work, and why they seem so darn high.
What is an HOA?
HOA refers to a homeowners association. An HOA creates and enforces rules for properties and residents within subdivisions, condo complexes, and master-planned communities. Among other things, an HOA may set architectural guidelines, ban certain activities, and make neighborhood improvements.
Through an elected board, neighborhood residents run an HOA, although the HOA may turn over various duties to a property management company.
Does the thought of being restricted by an HOA bother you? Look for a community without one. However, It may be hard to escape an HOA, though, according to iPropertyManagemet, about half of American homeowners live in places overseen by HOAs. The states with the most HOAs are Florida, California, and Texas.
Can you opt-out of an HOA?
Some neighborhoods with HOAs don’t require membership in the HOA, while others make it mandatory. In the case of mandatory membership, you typically can’t leave the HOA until you sell your home. However, if an HOA is put into place after purchasing your home, membership may not be required.
How do HOA fees work?
If you buy property in an area governed by an HOA, you often must become a member of the association and must pay HOA fees (also known as HOA dues). That money — paid monthly, quarterly, or annually — goes toward maintaining shared areas like sidewalks, private security, parks, lights, swimming pools, and clubhouses. Some HOAs may even be responsible for unfenced lawn care.
The HOA or its property management company might also impose fines for breaking the rules, such as parking in a no-parking zone or leaving trash bins outside too long after trash pickup has happened.
While some homeowners may grumble about HOA fees, keep in mind that the services paid for with those fees may mean you don’t have to cough up cash for things like lawn care (freeing up money for items like home furnishings).
Regardless of what the money covers, be sure to build the monthly, quarterly, or annual HOA fees into your household budget. Such dues often range from $100 to $700 a month, with the average HOA fee clocking in at $250 monthly, as published by Investopedia.
Are HOA fees worth it?
The answer to this question depends on your situation. If you feel like the services — such as a community pool and regular lawn care — you’re getting in exchange for paying HOA fees are valuable, then the fees may be worth it. But if you believe the fees are too high for what you’re receiving in return, then the HOA fees might not be for you.
When you’re hunting for a place to live, make sure you ask whether the community has an HOA, what the HOA rules are, and how much the HOA fees are.
What happens if you don’t pay your HOA fees?
If you fall behind on HOA fees, you may receive a letter demanding payment, may get calls from debt collectors, may be hit with a lawsuit, or may even face foreclosure on your home.
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