HOA

5 Surprises When Downsizing to a Condo

Dan Rafter — Mon, 09 Apr 2018 08:30:13 +0000

Yard work fills you with dread. The thought of shoveling your way through another winter is already causing your back to ache. And ever since your children moved on to college, half the rooms in your home sit unused.

You're ready to downsize from a single-family home to a condo. It's a move that makes sense: You don't need the space of a house, you're ready for a smaller monthly mortgage payment, and you're eager to chuck the chores and maintenance that come with a larger home.

But before you make the move into a condo, know that condo living does come with surprises. And many of them aren't pleasant. They don't have to scare you away, but you do need to be prepared for them.

Here are a few surprises that might await you when you become a condo owner.

1. Special assessments

When you become a condo owner, you'll have to pay either a condo fee or a homeowners' association fee to live in the building. That monthly fee goes toward the maintenance of the building's common areas and to pay for services such as landscaping and snow removal.

But what if your condo's roof needs to be replaced or the entire building needs tuckpointing? To pay for a large expense, your condo's board of directors might have to levy a special assessment; an extra monthly fee that unit owners pay until the building has raised enough money to pay for a large-scale project.

If your board decides your building needs a new garage, you might be paying an extra $200, $300, or more a month for as long as it takes to help pay for the construction. This extra money, if you're not prepared for it, could burst your household budget. (See also: What You Need to Know About HOAs)

2. You may end up on the board of directors

If you move into a large condo complex, you probably won't have to serve on the building's board of directors if you don't want to. But if you move into a smaller condo building with few residents, you may find yourself needing to take a turn serving as the board's director, treasurer, or secretary. An association can't function properly without a board, and if other residents are unwilling or unable to serve, ultimately, someone has to do it.

Serving on the board doesn't have to take up a lot of your time. But you will have to make decisions regarding the upkeep of your building. You might have to vote for an unpopular special assessment, or spearhead the ordering of new guard rails, hallway carpeting, or other items. If you have no desire to make any of these decisions, you should move into a larger condo building with more residents and more active boards of directors.

3. It may not be ideal for a pet

Some condo buildings don't allow pets, or only allow pets of a certain size. If your condo does allow dogs, and you happen to have one, you might find taking care of Fido requires a bit more work.

First, there are the stairs. If you live on the second floor or higher, you'll have to drag your pooch down the stairs — or into an elevator — every time your dog needs a bathroom break. Depending on the age of your dog, and yourself, this can quickly turn into a hassle.

Then there are the other dogs in your building. You might be unfortunate enough to live directly underneath the dog that barks all day long while its owners are at work. Or maybe you constantly bump into a dog that doesn't get along with your own. Those regular run-ins could be stressful.

Before moving into a condo, be aware that having a dog won't be quite as simple as having one in a single-family home.

4. The grocery haul

Bringing groceries into a single-family home is easy: You park in your garage or the driveway, and lug them in. Bringing large bags of groceries into a condo can be more work. It's no fun to lug them up three flights of stairs to get to your unit. Even if your building has an elevator, you'll still have to make multiple trips to bring in all your bags.

If you buy heavier items such as soda, beer, and water, that trip back and forth from your car to your condo can develop into a real pain. It's why so many condo owners take several smaller trips to the grocery store instead of one large one. Be careful here, though: Running to the grocery store every two or three days is an easy way to blow your monthly spending budget.

5. Plumbing problems can be a pain

Scheduling a visit from a plumber? Does that plumber need to shut off your water for an hour or more to repair a leaky bathtub faucet? This can be tricky if you live in a condo building with a shared plumbing system.

When you shut off the water in your unit, you might also be shutting down the water in your neighbors' units. Because of this, you'll have to schedule plumbing repairs with the building's board of directors. This could take a few days or a few weeks depending on your association and how many other units will be affected. You might not be able to schedule your plumbing repairs on the exact day of your choice.

Like this article? Pin it!

This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

What You Need to Know About Homeowners' Associations

Kat Tretina — Wed, 09 Aug 2017 09:00:06 +0000

When my husband and I were thinking about buying a house, we toured a lovely home that was on the lower end of our budget. It was gorgeous. It had high-end appliances and the owners had completely updated it. We couldn't believe the price, or that it had been on the market for weeks.

We told the realtor we were interested and were ready to make an offer and that's when she told us that the house was part of a homeowners association (HOA). She pulled out a massive binder with the HOA's rules, including what kind of grass we could plant, what kind of fencing was permitted, and what colors we could paint our home.

Finally, she dropped one more bomb: The monthly HOA fee was a staggering $600 a month. We quickly gave up any idea of buying that home, but it was a well-learned lesson.

Our experience isn't unique. HOAs are increasingly common, and they can be costly. Here's what you need to know about HOAs before buying a home. (See also: How to Deal With a Rude Neighbor)

HOAs can be costly

HOAs are residential governing bodies that provide certain services to the owners in the community. They are most commonly seen in condominium complexes or townhome communities, but some single-family home neighborhoods may have an HOA, too.

HOAs can be very expensive. According to Investopedia, the average monthly HOA fee is $200, yet it can easily reach as high as $700 a month. That amount is completely separate from your mortgage payment, taxes, and homeowners insurance. An HOA can dramatically increase your monthly housing bill.

HOAs vary from community to community

In some communities, HOAs provide many valuable services. They may cut your lawn, maintain building exteriors, provide a community pool, and set rules about community appearance.

Other HOAs are more bare-bones; they may only maintain common areas and you're responsible for your own landscaping. Because they can vary so widely from community to community, it's important to do your research and understand what's included in your fee.

HOAs may affect your mortgage application

When you're ready to buy a home, you will need to include the home's information in your mortgage application. Besides factors like your income, down payment, and the home's sale price, the mortgage lender will also ask you about HOA fees.

Mortgage companies will include the HOA cost in their evaluation of your application. If the HOA fee worsens your debt-to-income ratio, they won't give you a loan.

What happens if you fall behind on HOA payments?

Depending on where you live, the consequences for falling behind on your HOA payments can be severe.

When you first miss a payment, your HOA may charge you a late fee. If they still don't receive payment, they may send your debt to collections, which can damage your credit report. They can also ban you from using community amenities, such as the neighborhood pool or fitness center, until you pay what you owe.

An HOA can also file a lien on your property. That means if you sell the home, the HOA gets their share before you get any of the money from the sale.

Some states also allow an HOA to evict homeowners if they become delinquent on their payments. And in some areas, they can even foreclose on your property.

These consequences can have long-lasting effects, and can cost you thousands in late fees, interest charges, and even legal fees. That's why it's so important to ensure the HOA payment is well within your budget before buying a home.

Do your research

Buying a house is a huge decision. Besides factors like price, school district, and taxes, make sure you research the community's HOA and its rules. Depending on your area, your HOA fees can add thousands to your housing costs and can cause plenty of headaches.

Like this article? Pin it!

This article is from Kat Tretina of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: