What does "Homeowners association (HOA)" mean?

Definition

A homeowners association, or HOA, is a private organization that manages a residential community. HOAs enforce rules for homeowners and charge fees to maintain shared areas and services.

Understanding HOAs in Mortgages

HOA fees often appear during the mortgage process when buying a home in a community managed by an association. These fees help maintain shared spaces like pools or parks. In simple terms, homeowners pay regularly to support community upkeep. Example: If an HOA fee is $200 a month, that's $2,400 a year. This cost is usually considered in your mortgage approval. It's not just an extra bill; it contributes to neighborhood quality. A common misconception is that HOA fees cover all home repairs. They typically only cover shared areas, not individual property maintenance.

People Want To Know

Is the HOA included in a mortgage?

The HOA is not included in the mortgage. Homeowners are responsible for paying HOA fees separately, which cover the maintenance of shared areas and services within the community. These fees can vary widely, typically ranging from $200 to $1,000 per month depending on the community and its amenities.

What is the new Colorado law for HOA?

The new Colorado law for homeowners associations (HOAs) requires them to provide homeowners with a detailed budget, including proposed assessments, at least 30 days before any vote on fee increases. Additionally, the law mandates that HOAs must allow electronic voting and requires them to maintain a website with access to governing documents and financial information.

Can you roll HOA fees into a mortgage?

You cannot roll HOA fees directly into a mortgage. However, lenders consider HOA fees when calculating your total monthly housing costs, which can affect your debt-to-income ratio. Ensure you account for these fees when budgeting for your mortgage.

Can HOA foreclose on your home if you have a mortgage?

Yes, an HOA can foreclose on your home if you have a mortgage. This typically occurs if you fail to pay HOA fees, which can lead to a lien against your property. The HOA is allowed to enforce this lien through foreclosure, even if you have an outstanding mortgage.

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