HOA boards can go a long way toward improving a neighborhood for all residents. Why, then, do some homeowners express frustration about the large number of HOAs in the Dallas-Fort Worth area?
In order for an HOA community to thrive, the board has to collect HOA fees (aka HOA assessments). These fees go toward the maintenance and upkeep of shared spaces, neighborhood amenities, events, and more.
HOA fees can also have a significant impact on your cost of living. If you're debating buying a home in an HOA community, read on to learn some important information about HOA fees.
HOA Fees and Mortgage Pre-Approval
When you're in the process of buying a home, you're most likely going to go through the mortgage pre-approval process. When you do so, lenders will consider your debt-to-income ratio to assess your overall buying power.
Most HOAs charge fees on a monthly basis, although some will allow you to pay an annual fee. No matter the fee structure, most lenders will factor HOA fees into your expenses if relevant. This can reduce your buying power.
HOA Assessment Increases
When you're deciding if you can afford to live in an HOA community, keep in mind that fees can increase each year. In the state of Texas, there is no limit on how much or how often fees can increase from one year to the next.
If an HOA property is right at your maximum limit, consider future expenses. An assessment increase may put the property out of your price range in the future.
Unpaid HOA Payments
Why should you take it seriously if HOA fees push you closer to (or over) your maximum budget? In the state of Texas, falling behind on HOA payments could cost you your home.
Most HOA boards will address late payers personally before resorting to other actions. However, if a homeowner fails to pay fees several months in a row, HOAs in Texas can place a lien on their property. In worst case scenarios, this can result in a foreclosure.
HOAs and Rental Properties
What if you're looking to purchase a rental property in an HOA community? First, you will need to talk to the HOA board or HOA management company. Some HOAs have restrictions regarding rental properties.
If renters are permitted, be prepared to cover HOA costs, yourself. Expecting renters to pay HOA fees can reduce your applicant pool. Plus, if renters fall behind on payments, you could lose your investment property to foreclosure.
Factor in HOA Fees Before Buying HOA Homes
If you're looking to buy a property in the Dallas-Fort Worth area, you're going to notice that HOAs are common. While an HOA can improve your neighborhood and your living experience, it does come at a cost. Make sure you include HOA fees when calculating your buying power.
Are you enjoying HOA living but wish your HOA could do more with your money? PMI has both the legal knowledge and the hands-on experience to improve your HOA. Contact us to learn about our customizable HOA management services.