Are You Buying a Home in an HOA? Here’s What to Know

In this article

1. Key Takeaways
2. What to Know about HOA Fees
3. Seller’s Responsibility Regarding HOA Fees
4. The Role of Title in Handling HOA Information
5. Condo-Specific Issues Related to HOAs
6. The Importance of Early Inquiries about HOAs
7. Real-Life Experiences: HOA Rules and Their Consequences
8. Want Better Mortgage Rates in Georgia? A Good Lender Can Help

Homebuyers seeking better mortgage rates in Georgia may be overlooking a crucial factor in their decision—the benefits, challenges, and cost of living in an HOA.

HOAs, or homeowners associations, are sometimes called “planned communities.” Members who live in an HOA-managed neighborhood contribute toward shared amenities and neighborhood costs by paying dues. A board of elected members typically oversees neighborhood management and enforces a set of communal rules.

If you buy a home within an HOA community, you agree to pay dues and follow the association’s rules regarding your property. You’re also on the hook for any fees assessed to you when you break those rules.

For those who prefer HOAs, they also provide many benefits for the cost—first and foremost association boards exist to keep property values high and provide a safe, upkept space for members to live.

As a homebuyer considering whether to move to a neighborhood with an HOA, it’s important to have all the information necessary to make the right decision for your family. The mortgage experts at Moreira Team can help. Here’s what you need to know.

Key Takeaways

• Consider HOA Costs: HOA fees average $200-$300 monthly but can vary significantly.
• Understand Fees: Know upfront and ongoing fees, including transfer fees when buying in an HOA.
• Seller’s Responsibility: Sellers must disclose HOA fees and property conditions.
• Title Disclosures: Title provides critical HOA information before closing.
• Condo-Specific Fees: Condos may have extra fees for shared amenities.
• Early Inquiry: Ask about HOAs early to avoid surprises.
• Check HOA Rules: Familiarize yourself with HOA rules on pets, business activities, and property changes.
• Lender Assistance: A good lender can help navigate HOA-related costs and mortgage options.
• Moreira Team: Provides competitive rates and guidance through the home-buying process.

What to Know about HOA Fees

Joining an HOA typically means you’re agreeing to certain rules and regulations laid out by the association. These may be rules about upgrading your home’s architecture and maintenance of the property in general, as well as rules covering activities like parking, noise complaints, and using shared amenities. But it also means you’re paying dues and other fees that are used toward the communal upkeep of the neighborhood.

Residents pay monthly, quarterly, or annual dues to their association. HOA fees in the United States average $200-$300 per month, though this figure can vary widely from one area to the next, ranging from as little as $100 to as high as $1,000 per month. Additionally, the association can assess late fees for delinquent payments and fines for rules violations. These are potential costs you agree to when you sign your CC&R (Covenants, Conditions, & Restrictions) agreement.

New HOA homeowners pay a transfer fee when they purchase a home in a planned community. A transfer fee, also called an initiation fee, is assessed to you when a property transfers from the previous owner to you. It’s a one-time, fixed amount that typically goes to an HOA’s reserve fund. This fee differs from your recurring dues payments and any special assessments HOAs charge their members to cover additional operating costs.

Ideally, your association will use the money from these fees to pay for valuable entities such as:

• Upgrades to shared spaces like pools and parks.
• Maintenance of sidewalks and roads, fencing, landscaping, and hallways and roofing in multi-unit condo buildings.
• Technology upgrades like entry and exit gates, security cameras in shared spaces, and improved lighting along walkable areas.

When you sign your contract, these fees are listed in the seller’s property disclosure.

Seller’s Responsibility Regarding HOA Fees

The seller of a property in an HOA community must disclose specific information, such as the condition of the property, and is responsible for listing any upfront fees or pending special assessments in the contract. If these fees aren’t detailed in writing, the seller must pay them upon closing.

Homebuyers weighing their options for mortgage rates in Georgia should always consider potential upfront costs, such as appraisal fees, origination fees, government recording fees, and homeowner’s insurance.  However, sellers of HOA properties typically collect additional fees upfront, including the current and following month’s dues, especially in condo communities.

Yearly fees are often prorated for the year and collected at closing, so the seller will be responsible for the portion of the year they lived in the home. These costs should be factored to make an informed purchasing decision.

The Role of Title in Handling HOA Information

A homebuyer learns much of the information about the HOA toward the end of the buying process from the title. Once your offer is accepted, the seller must provide important documents about the HOA and property. These can include critical information such as:

•  Undisclosed fees or charges
•  Outstanding dues or violations to be paid by the seller before closing
• Typical frequency and amount of assessments
• Governing documents like CC&Rs and bylaws
• Information about the association’s finances and debts
• Disclosure statement detailing any issues with the property
• Deed to the property
• Settlement statement

This ensures that the seller is providing you with a full picture of what kind of obligation you’ll be taking on when purchasing a home under HOA management.

Condo-Specific Issues Related to HOAs

When purchasing a condominium unit in an HOA versus a single-family home, you should keep in mind that this often entails paying additional fees.

Condo fees are used to maintain the entire condo building for all residents, including shared amenities, landscaping, insurance, parking, security, and other critical resources. If you are purchasing a larger unit or more than one unit, you’ll probably pay more than someone who owns a smaller unit.

However, the way each HOA delineates condo fees differs and it’s important to determine what you’ll be paying specifically—and what it covers.

Condos can also come with additional closing costs, including charges for condo documents ordered from a 3rd party, which can range between $400-$800.

The Importance of Early Inquiries about HOAs

It’s crucial to ask about HOAs upfront and early in the home-buying process. This helps you avoid any unpleasant surprises when you close on your new home. Having a clear picture of the cost of living in one of these planned communities helps you understand whether an HOA is right for you.

Early inquiry helps you avoid unexpected fees or rules. It also gives you the ability to compare different HOAs, sellers, and properties and make a more informed purchasing decision when seeking the best mortgage rates in Georgia.

The last thing you want is to find out that the previous seller has left you with a stack of fees and violations, which if unpaid can become liens and are your responsibility to rectify once the title is in your name.

Real-Life Experiences: HOA Rules and Their Consequences

You’ll want to have access to an association’s bylaws and other governing documents early in the process. That way you can get a feel of how these rules will affect your family and whether they’re deal breakers for your needs.

For instance, HOAs may have rules restricting pet ownership, such as size limits and breed restrictions for dogs, which can impact a buyer’s decision.

If you own your own business, you should keep in mind that an HOA may not allow you to conduct certain types of commercial activity on your property or receive frequent or large shipments.

Architectural maintenance and upgrades must meet the approved guidelines of the HOA. So if you’re planning to make additions to your home, keep this in mind.

A lack of upfront knowledge about these rules can lead to deals falling through.

Want Better Mortgage Rates in Georgia? A Good Lender Can Help

Locking down better mortgage rates in Georgia and landing the perfect home can be a long and complex undertaking. The right mortgage lender will help you navigate the purchasing costs when buying a house or condo in an HOA community.

A qualified lender can present you with the best loan options available to you, based on factors such as the current state of the housing market, which loan programs you qualify for, the loan term and amount, the loan-to-value (LTV) ratio, and whether you’re pre-approved.

When you partner with the Moreira Team, we’ll help you make an informed purchasing decision, with access to all available loan options and information about upfront costs such as typical closing costs and HOA-specific fees.

The Moreira Team can help you take advantage of the best mortgage rates in Georgia, and we’ll be your guide through the entire purchasing process. We can help make a more aggressive offer by securing an Upfront Approval Guarantee, which provides qualifying buyers with a fully underwritten approval to provide the seller and increase your chances of landing the right home purchase terms for you.

The Moreira Team is ready to help you navigate the home-buying and loan process so you can start the next chapter of your life. It’s our mission to maintain transparency so you understand each step. Our team has the experience and resources to find a loan that suits your needs at a competitive rate. Get your custom rate quote today and take the first step toward homeownership.