Many people are hesitant to sign up for things when they don’t know what they’re for, and one of these things is a home in a neighborhood with an HOA. An HOA will have fees, and the money you give to the association is put back into your community to fund extra things. The funds can go towards anything from landscaping, community pools, and even decorations for the neighborhood entrances.
While it may seem like a hassle to pay extra money for the little things, many people find that they enjoy the perks and privileges of having a homeowner’s association within their neighborhood. Their work oftentimes pays off in pleasant ways, and many people choose to send in extra support each year to cover new projects.
In case you’re still curious about how it works, here’s a quick and easy guide on how HOA fees work. Every association is a little bit different, since different neighborhoods require different budgets and projects, but the general idea is usually the same no matter what community you’re in. Your Atlanta, Georgia, real estate agents can be of help in the ATL area. Living somewhere else? Use The OFFICIAL Real Estate Agent Directory® to find a real estate agent near you.
The HOA budget is set yearly, and can rise and fall depending on what needs to be done, who is paying, and how large your neighborhood is. More units (houses) means a larger budget, since there’s more ground to cover to support the entire neighborhood. Each unit pays a designated amount to support the community, and the budget is split up between ‘current year items’ and ‘reserves’.
Current year items can cover whatever projects are lined up for the upcoming year. This can go towards replacing an entrance sign or upkeep of a pool, or even be used to fund a new project entirely. Your monthly payments can fluctuate throughout the year, or stay static until the end of the term. Depending on how many people are paying, HOA fees can rise and fall to stay within budget.
Reserves are put back to fund larger projects, and are usually less than the current year fees. These funds can be saved up to fix roads, roofs, or parking lots. However, if the current year items require more funding, homeowner’s associations will usually pull money from the reserves to fund them. This makes it important for everyone to pitch in, or else the reserves will be used to cover the basic items.
The fees can fluctuate from year to year, and it’s important to remember that the community runs off the people that live in it. If people do not pay their fees, the association may have to raise the cost to stay within budget. A large neighborhood with many paying members may have many more perks than one small community with next to no budget.
However, no budget is flawless. There will come times when your HOA comes up short, and they may have to make assessments to see if they can raise funds to support projects or pay for emergencies. Budgeting is not an exact science, so it’s important to support your homeowner’s association so they don’t have to struggle to pay for community projects.