Homeowners Association Fees and Benefits

Understand the impact of purchasing a home within a Homeowners Association

Many homes, townhouses and condominiums in the United States are under the watchful eye of a homeowners association (HOA). A homeowners association is a private organization established to oversee the homes and common areas within a community. Homebuyers can elect to be a part of an HOA simply by choosing to buy within a housing community that is regulated by one. Each resident agrees to abide by the HOA rules for the condition of the homes and land within the community. Plus, they have to maintain a defined standard for the upkeep of the property.

The purpose of a homeowners association

To maintain the value of homes within a homeowners association, the HOA requires buyers who live in these respective communities to pay mandatory HOA fees. In return for the fees, buyers benefit from shared amenities they might not otherwise be able to afford. They also agree to abide by a set of covenants, conditions and restrictions (CC&Rs) set forth by the association. The CC&Rs are designed to maintain the quality of the neighborhood over time, making it more likely that the homes within the community will have a higher resale value than they would otherwise.

Typical responsibilities and the benefits of an HOA

A homeowners association is in place to better the overall appeal of a neighborhood or community. To do this, they aim to keep neighborhoods operating within a set of defined standards that affect everything from yard maintenance to storage units on the property and the actions of residents. Since each home is required to abide by the same set of rules, HOA communities tend to be impeccably maintained and ripe with curbside appeal. Although CC&Rs may change by neighborhood, typical contracts can include mandates for:

  • Exterior home maintenance
  • Interior home maintenance
  • Landscaping and fences
  • Noise levels
  • Parking regulations
  • Renting regulations
  • Pet rules and restrictions

HOA fees often also provide residents with services and shared amenities that can include:

  • Basic landscaping services
  • Garbage collection
  • Recycling services
  • Sewer services
  • Recreational amenities which can include pools, workout areas, party spaces
  • Maintenance of common areas in the community
  • Monthly meetings
  • Newsletters
  • Dispute resolution services

Weigh HOA fees against the value

If you are looking to purchase a new home and are debating whether or not a homeowners association is worth the fees, start by weighing the value against the cost. Decide what each benefit is worth to you on a monthly basis and what they would cost outside the HOA. If the monthly homeowners association fees are not too off base when compared to the number you come up with, you may decide that the extra expense associated with a particular property in an HOA is worthwhile. When making your comparison you'll also want to consider how being a part of the HOA will impact the resale value of your home. Knowing that the appeal of your neighborhood will increase because of the well maintained homes may be enough to tip the scales in favor of an HOA.

Know what you are agreeing to before you buy

Once you have made the decision to buy a house within a homeowners association, you want to take some preliminary steps before you sign a contract. It is important to know exactly what you are agreeing to so that you can avoid any penalties that result from not following the contract. Here are some simple steps you can take before deciding to buy:

  • Read the CC&R document in its entirety
  • Talk to people in the neighborhood and ask if they're satisfied with the HOA
  • Find out if there are any open lawsuits against the homeowners association
  • Ask for a list of services, as well as a history of the dues and fees to understand trends and how your money will be put to use

Apply for a mortgage at Citizens Bank

Whether you are looking to buy a home within an HOA or not, Citizens Bank can help you find the right adjustable or fixed rate mortgage for your purchase. You can learn more about Citizens Bank's mortgage rates and options or apply for a mortgage online today. For additional information, contact a home loan adviser at 1-888-514-2300.


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