Factoring HOA Fees Into Your Budget
- Jul. 30, 2015
- Shantell Russell
- Personal Finance
If you are interested in making the leap toward homeownership, buying a condo might be a good place to start. You will still get the advantage of having a close knit community in the same building and a homeowner association that continues to develop the area and start special projects.
For example, your complex might have a pool and regular maintenance will be covered through the homeowners association. To fund projects like this, homeowner association fees are applied to those who decide to purchase a condo in that specific building.
Before purchasing a condo, try to gain an understanding of the purpose of HOA fees and how much you can afford when deciding to invest in a home of your own.
Know What You Can Afford
When you establish a budget for your home loan you will also need to factor in the monthly cost of HOA fees. Searching for a condo will be easier if you have determined an all-inclusive budget ahead of time, according to Bankrate.
"You see a lot of great deals on condos right now," said Roger Winston, an attorney for Ballard Spahr's Bethesda, Md., office, according to Bankrate. "But given the current financial environment, you have to do your due diligence on the HOA to make sure you aren't buying into a situation you can't afford."
Understand how much you can spend and make sure you know exactly amount any condo you are considering charges in HOA fees.
Become Familiar with a Building's HOA Fees
During your search for a condo it is important to look at the past few years of HOA fees a building has charged those living on the property, noted Realty Times.
Knowing at least the past three years of HOA fee history can help you know whether you can expect to pay around the same amount of money during the time you will own your condo.
"Buyers should be looking for a steady financial picture," said Allison Scollar, a real estate lawyer, according to Bankrate. "Big yearly spikes and dips in spending are good signs the building is in trouble."
Enlist the Help of a Real Estate Agent
When embarking on this journey it is especially beneficial to get professional assistance from those who are familiar with the market and can direct you through the process. Additionally, an experienced real estate agent can help you know whether an HOA fee is fair for the current market conditions.
Ask your friends and family if they have any recommendations for real estate agents they have worked with recently. This can help you determine who to hire.
Find Ways to Save
While an HOA fee might be inevitable, Zillow, an online real estate company, indicated you can save some money when it comes to these expenses in a few different ways.
Consider working directly with the HOA to lower your fees. For example, property management might be costing you too much money. However, without working closely with the association you won't be able to identify the issue and then lower the cost of property management fees.
Renegotiating insurance premiums is another way to help lower the cost of monthly HOA fees. Consider getting an insurance quote from several providers and discuss this with the current provider to see if a lower rate is in the cards. This can help cut costs substantially.
Participating in your HOA is a great way to help encourage savings which will in turn be passed down to you and other condo owners. However, changes may not occur immediately. Being patient and sticking to your budget when looking at condos is the most important part of searching for the perfect new home.