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Home Buyer

What to Know About an HOA Before Buying a House

Reading time: 1 minute 30 seconds

Homeowners’ Associations, or HOAs, can be a big factor in deciding where to buy a house. Many HOAs set rules around architectural and landscape changes to homes in the neighborhood, maintain communal amenities like pools and clubhouses, and more.  Some buyers might appreciate the standards put in place by an HOA, while others could find the rules stifling. Before you get too far down the line with a property, there are a few important ways to learn more about the home’s HOA.


#1. Read the Governing Documents

This may seem tedious, but it’s important to read the HOA’s bylaws, amendments, covenants, rules/regulations, and articles of incorporation. Pay special attention to items pertaining to individual homes, like paint colors, architectural design approval, landscaping rules, rental property restrictions, and even regulations around satellite dishes. It’s important to know what you’ll need the HOA’s approval on before you start a project.


#2. Look at the HOA’s Financials

You don’t have to be an accountant to review the HOA’s financials. You can ask to see the most-recent financial statements to make sure that the organization is well-funded and doesn’t have a high percentage of unpaid dues. Look at reserve funds, which is money allocated for the repair of big-ticket items like sidewalks or other common areas. An HOA should have a healthy reserve fund to be prepared for unforeseen repairs.


#3. Itemize the Dues

If you’re going to be paying an HOA fee, you should know how the money is allocated. Is garbage collection included? Snow removal? Neighborhood parties? Know where your money is going and how it will be spent. Also, take a close look at dues over the last few years to see if there have been any large increases. HOAs usually raise their dues by a percentage each year but be aware of what the trend for your HOA has been.


When you’re buying a home, you have the property inspected. Shouldn’t you take a good look at the HOA too? Understanding the rules you’ll be subject to is a critical piece of making sure you love your new home. As your home financing experts, Cherry Creek Mortgage is here to help. Call us today!