After finally saving up enough money to use as a down payment, I decided that it was time to hit the market. I met with a lender, got pre-approved for a loan, and then started visiting different properties. However, I quickly realized that I didn't know as much about real estate as I would have hoped. I wanted to find a great neighborhood and know what to ask the professionals, but I could tell that I needed a little help. To point me in the right direction, I started working with a great real estate agent who was familiar with the area. This blog is all about educating the general public on real estate matters.
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If you live in a multi-family home that has a homeowner's association (HOA), you have the right and responsibility to keep up with what is going on in the HOA. One aspect you should pay close attention to is the reserve fund the HOA keeps. This account is used to pay for expensive, long-term renovations to the community; if the fund is low on money, you may encounter the following three issues.
Maintenance will not be completed
The first problem is that the work the community needs might not be completed. If the homes in the community need new roofs, the HOA will not be able to schedule this service until the reserve fund has enough cash in it. When a reserve fund runs low, the community will suffer. Large renovations will not be completed, and regular maintenance tasks might start being ignored.
The problem with this is that you will be stuck in a house and community that needs repairs, and there will be nothing you can do about it.
Fees may go up
When a reserve fund is low on cash, the HOA board members might decide to ask the homeowners for more money. This could be in the form of a monthly fee increase, or it could be in the form of a lump sum payment. In either case, you may have to pay out more money than you were expecting, and this could affect your budget.
You may have trouble selling your home
The third danger of a low reserve fund balance is the problems you may experience if you try to sell your home. First of all, the value of your home might have decreased due to the lack of repairs and maintenance completed in your community. The second issue is that potential homebuyers might be afraid to buy a home in your community, simply because of the condition of the HOA.
In addition, lenders typically look into HOAs when people apply for loans in communities with HOAs. When a lender looks at the HOA, they may refuse to give a loan because of the lack of funds the HOA has. These issues could prevent you from selling your home if you want to move to a different community.
If you live in a community with an HOA, you should attend the meetings if possible. This is the best way to make sure your HOA is running properly.
Contact a service like Cornerstone Properties Inc for more information.
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