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Are you part of a homeowner’s association? The 2 Factors You Need To Know When It’s Time To Sell or Buy!

HOA
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Team Tudisco helps you navigate the waters of FHA and HOA’s.

There is certainly nothing wrong with living in a community with homeowners associations dues. One of the largest perks is maintenance free living and sometimes clubhouses, fitness facility’s or even golf courses. The flip side is you need to understand that when your neighbors don’t pay their association dues it can negatively affect you. Here’s how:

No FHA Financing
FHA has an approved condo list and your community has to qualify to be on this list. For your community to obtain this FHA approval certain criteria needs to be met such as percentage of investors vs. homeowners,  budget and more. You can download all the guidelines through this link: FHA
 
If you find that you are not on the approved list it can negatively affect your property values because you are eliminating a group of potential buyers i.e. those using FHA. If your community is especially attractive to first-time home buyers the impact can be much greater because a lot of first time buyers need to use the benefits of FHA financing. FHA financing offers a 3.5% down payment and allows for higher debt to income ratios. It’s less restrictive than most conventional loans. The main point here is that anytime you eliminate a group of buyers who can’t buy your home it can have a negative affect on your home values. The buyers can LOVE your home but if they have to use FHA financing they won’t be able to buy it. There is a fee to your association to have this certification but they also can’t have too many homeowners behind on dues to qualify. Check here to see if your community is FHA approved.
 

Delinquency Rate
So your neighbors aren’t paying their monthly dues and you think that is their problem. Well it is until you want to sell your home. If your community has a delinquency rate higher than 15% not even a conventional loan will get approved for your community. Yes you guessed it you are eliminating a group of potential buyers. If your community is FHA approved their guidelines have some flexibility but you could be looking at only cash buyers if you don’t have FHA approval. At that point you would be limited to cash only buyers. This usually means an investor and that will result in a plummet of home values because you only have one pool , the cash pool. Not to throw in another monkey wrench but most of the investors will want to buy the homes to rent it out. If your community doesn’t allow rentals you have yet another issue. When this happens values plummet.

Advice
When buying your home ask these questions;

1. Is the community FHA approved?

2. Does the management have long term plans to maintain their FHA approved status if they have one?

3. Policy for going after delinquent fees from homeowners i.e. will they pursue foreclosure if need be?

If you already live in a community get active with your board. Often times lack of participation by homeowners is a big issue since no one is keeping watch.

Sincerely,

Nicole and Tony Tudisco
Wheatland Realty
www.TeamTudisco.com

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