The homebuying process is filled to the brim with acronyms. One that often gets overlooked is HOA. Or, homeowner’s association. What exactly is a homeowner’s association and, if your home has one, what should you expect?
Simply put, an HOA is a group put in place to ensure your neighborhood or community meets certain standards. Oftentimes an HOA- funded by monthly or annual dues from the homeowners- will provide amenities like a community pool, security gates, and parking garages. They also serve as a sounding board for exterior home changes and landscaping choices.
Where Does Our $ Go?
According to the Foundation for Community Association Research, the number of Americans living with an HOA has risen from 1% in 1970 to 25% in 2019. When funds are collected, they are usually put into two different pots. One part goes toward monthly expenses, and the remaining money goes into a reserve fund. This reserve fund serves as a safety net, to be tapped for emergency expenses that arise. Say the pump goes out in the community pool. Instead of tapping each individual resident for repairs, the emergency fund will cover that wear and tear.
Or, in the event that your neighborhood or community is very large in size, HOA funds may go towards an annual salary for a full time property manager. Typically, members of an HOA can expect to pay $200-$300 a month on average. This of course fluctuates throughout the country and depending on home size and available amenities. More square footage and options, more money.
Along with your dues, expect to contend with an HOA Board. This board is made up of a select few homeowners, elected to represent the needs of everyone in the community. Making an exterior renovation or even a paint color change will usually involve going before the board for approval. This is done to ensure the look and feel of the entire community remains consistent.
Are HOAs A-Okay?
Homeowners Associations can sometimes be divisive or controversial. People either love them or they hate them. Realtor.com has a great shakedown on the pros and cons of having an HOA. Check it out! And sound off in the comments below… do you love or hate your HOA?