Mortgages are forms of loans from bank which is given to individuals of estate firms to be paid back on a monthly basis till the stipulated timeline of payment is reached. This process gives the receiver the opportunity to borrow money from what is considered the best lender.
Mortgages are given in exchange for your building or property as a form of collateral and when you are done with the payment of the money given to you by the bank, your house would be given back to you.
Failure to pay back the money during the timeline, your house, or the property given out as part of the mortgage would be forfeited to the bank or lending firm as it was legally given out as part of the lending process.
However, the question is, are HOA fees included in mortgage?
HOA fees are not included in mortgages because of its members and others who will later join the Association. But, if you want your HOA fees to be included in the mortgage, Your HOA must allow it, then, you have to submit a special request to the lending firm for approval.
What are HOA Fees
HOA fees are types of dues and accepted sums of money that are dully approved by the board of an HOA which is paid into the HOA’s account or any officially designated account by the HOA, for the sole purpose of maintenance and good upkeep of the HOA’s environment.
The essence of HOA fees is not just to maintain and manage, the fees are also collected to enable the HOA and its Board of Directors to handle anything that comes up as an emergency that needs to be attended to in the HOA at any point in time.
These due are paid monthly, quarterly or annually depending on how the HOA chose to arrange the form of payment and what works better for them and all the occupants of the HOA.
Are HOA Fees Included in Mortgage?
Basically no. In most cases, the HOA fees are usually not included in the mortgage, because of the fact that there would be other people coming in to join the HOA and would automatically become part of the homeowner’s association of the said HOA.
Sometimes, the HOA fees can as well be included in the mortgage, and this is done at the process of applying for the mortgage, on special request which would be approved and endorsed by the lending firm
Pros of Including HOA Fees in Mortgage
There are certain advantages of having your HOA fees in the mortgage, and this might be enticing to attract people to it at any point in time.
The following are some of the pros of including HOA fees in mortgage:
1. Quick Funding by the Lending Firm
Home Owners Associations are not always quick in disbursing funds from their pocket for anything that needs immediate attention, even when the money is there. This is the state of many HOA’s when it comes to funds.
But with the HOA fees being included in the mortgage, you are sure of receiving the full amount of money for any capital project you want to be carried out in the environment like repairs of roads, electricity, social amenities, emergency interventions, etc.
With this, there will be no form of delay disbursing of the funds needed for such a project and many bureaucracies would not be required before the project is completed. You will get the full amount as of when due.
2. Effectiveness on the Part of the HOA Board
Funds are very necessary and is one of the major things that can make an HOA board be very active, effective, and prompt in carrying out anything that needs to be done and attended to in the HOA.
The board members will be very quick in action when it comes to issues of capital projects and many other things that must be done at any particular time without any form of delay.
It will also help the HOA attend to anything, be it emergency or whatsoever would come up.
3. Lower HOA Fees:
This would actually help in bringing down the fees that should be paid by homeowners, but in reality, it is not as it should be. This does it to help the homeowners have a slight decrease when it comes to their dues in terms of some capital projects and emergencies, unlike if there were no mortgage included in the HOA fees.
These are parts of the pros attached to having your HOA fees included in mortgage.
Cons of Including HOA Fees in Mortgage
On the other hand, there are also certain disadvantages attached to having your HOA fees attached to a mortgage. They are:
- Using the HOA Mortgage for the Wrong Purpose: The reverse would be the case if the HOA uses the money from the mortgages for wrong reasons unlike what it was intended to use for. This would be a form of disaster for the HOA.
- Challenges with Delinquent Homeowners: There are certain homeowners that will give you issues when it comes to paying dues, and if you have such people in your HOA, things may backslash to you when it comes to your HOA fees being included in the mortgage and when it comes to paying back.
- Managing the Mortgage: This can be challenging to the HOA if the board members are unable to manage the mortgage well. It would become an issue.
These are part of the disadvantages of having your HOA fees included in mortgage. You can verify what Home Owners Association (HOA) covers for the Townhouse.
Having a mortgage is good for an HOA, but if care is not taken and if the said mortgage is not well managed it would become an issue to the said HOA.