Is a Community with a Homeowners Association Right for You?
If you’re interested in buying a home, you’ve probably thought about how many bedrooms you want, the general are in which you want to live, whether you want a large yard, and many other considerations. However, you may not have taken the time to consider whether you’d like to live in a community governed by a Homeowners’ Association (HOA).
These entities collect dues every month in exchange for enforcing the community’s rules and maintaining common areas such as green space or swimming pools. The following advantages and disadvantages of living In an HOA community can help you decide whether you’d prefer to live In one.
Housing Cooperatives
According to the National Association of Housing Cooperatives, 1.2 million Americans live in cooperative housing. Co-ops are common is older cities like
Philadelphia, San Francisco, and Washington because there are many buildings constructed before 1961. The largest preponderance of co-ops is in New York City, where 85% of all multifamily units are owned as cooperatives. Co-ops are also found in situations where a group of people desires communal facilities and specialized living. Student cooperatives offer inexpensive housing near many college campuses. Artists, the hearing-impaired, and
elderly individuals have also established co-ops throughout the country.
the country.
Mortgages can be obtained for a co-op. A primary difference is that a buyer must select a lending institution from a pre-approved list maintained by the
co-op board. Banks demand that the co-op board sign an agreement to foreclose on the owner’s shares if the mortgage defaults. A list of approved lenders can be obtained from the co-op’s management office. “Share Loans,” as co-op mortgages are officially known, are available in most varieties available for traditional mortgages.
Purchasers can select from adjustable rate, fixed rate, or hybrid loans. Because of the added risk of writing a co-op share loan, rates are generally .25% higher. Most major banks have gotten into the co-op mortgage business, so buyers should be able to find financing with a well-known, reputable institution. A 20% down payment is required for a co-op mortgage. Home equity lines of credit (HELOC) are generally not available for co-ops. Of course, a monthly fee is charged to owners by the co-op board to maintain the communal property.
PROS
Less Maintenance
An HOA often handles yard work and landscaping, including removing snow on sidewalks This not only ensures that all yards will meet a certain standard, it also savesyou the time, hassle, and expenses associated with doing it yourself.
More Amenities
HOA communities often have access to amenities such as pools, clubhouses, park areas, playgrounds, and walking trails. These can significantly add to your enjoyment of your home and neighborhood.
Protected Property Values
The HOA’s moles help protect the community from homeowner who let their homes and property become run down or who want to do something far outside the norms of the community. The fact that your next-door neighbor can’t paint his home bright orange will help protect the value of your property- as well as your eyesight!
CONS
Added Cost
In addition to any mortgage, you’ll also be paying monthly dues that could rise in the future. For example, if the community’s pool needs to be replaced, the 1–10A may have to increase dues In order to pay for it.
Possible Legal Consequences
Your HOA may be able to sue you if you fail to pay your dues or don’t follow the rules It may also try to put a lien on your property and ultimately foredose on your home if don’t pay your dues This is possible even if you’re current on your mortgage payments
Lack of Freedom
HOAs can have rules governing everything from the type and color of mailbox you have to what you can put in your yard. If these types of restrictions bother you and you’d like more freedom, an HOA-community probably isn’t the best choice for you. An HOA Is a little like a marriage. It works well in some cases, but not every time. Some people love living in HOA communities, and others find that the relationship is too confining. As you start looking for a home to buy, take the time to consider which option is best for you.
