How Your Home Loan Can Be Affected By An HOA?

Homeowner Associations (HOAs) are special platforms, which help residents tackle property management agencies in a better way. But, people sometimes feel that HOAs are over-policing them. It doesn’t matter if you like HOAs or hate them, they are here to stay. You will be surprised to know that the HOAs or Condo Association governs almost 80% of the new construction in the US. A significant population in the US resides in such neighborhoods.

HOAs are not just giving citations for a sagging shutter or open garage, but they pay for the needed services, which involve things like landscaping, clubhouses, pools, gates, common areas, and parking enforcement. In a Condo or townhome community, HOAs take care of the repair work of the exterior of units. As far as the fee of the HOAs is concerned, then it can vary from several hundred dollars per month to a few hundred dollars a year, depending on the area and services provided.

You can’t avoid the HOA fee, and since it is a significant part of your mortgage, you need to consider it while preparing to spend money on the mortgage.

To find out more about HOA requirements and its implications on your finances, get in touch with PIF Lending, a professional service that helps people with home loan and mortgage refinancing.

Make sure you know the rules before making an offer

If you are looking to buy a home in an HOA-managed development, you need to examine HOA finances carefully. You need to check if your realtor connects with the agent of the seller to get you copies of the full financial report for a particular community. These documents are required disclosure before making an offer on your house, which allows you to understand the financial implications of buying the property.

Your lender is going to take a look at the ratio of buyers to the renter, condition of the property, vacancy rate, and its vulnerabilities towards natural disasters. The financing will become difficult if the number of renters is too high because the lenders will be reluctant to give a loan to the borrower in a condo building where the rest of the owners are stuck with special assessments for keeping the building habitable after a major disaster. So, you may pay a higher interest rate. You should also keep in mind to pay your delinquent HOA fees because not paying it could have serious consequences on your home loan payments.

HOAs have got permission from several courts to foreclose on homeowners who are unable to pay the HOA fee. So, mortgage lenders who want to stay in the first lien position to get the payment in case of loan default are paying the delinquent HOA fees of the borrowers. As a result, many lenders want fees paid as a condition of the loan, and repeated delinquencies may result in lenders seeking judgment for repaying the fees.

In areas where HOAs have the right to foreclose on a borrower, some lenders can charge higher rates for properties, which are managed by an HOA. Therefore, you must be aware of the consequences. Before buying a home, you must pay attention to the HOA fees because it may want you to change your decision. For more details, you can get in touch with experts such as PIF Lending.