Working with home buyers, especially first time home buyers, in today’s market is making “lifelong learners” out of us whether we like it or not. Makes me feel like I should have served in the Navy. They understand that “It’s not just a job it’s an adventure”
Loan guidelines change more often than many people change their socks and as a result, something that may have worked a month ago doesn’t anymore.
When we’re all learning on the fly, there’s going to be some turbulence and we have to learn from it, so we can avoid it the next time around.
In our market (The IE) we generally don’t give much thought to monthly HOA fees, because unless it’s a condo, the HOA fees are usually $60-$100 a month. In the context of a home buyer budget, property taxes have a bigger impact and as a result we’ve become very accutely aware of them.
How much impact do HOA fees have on qualifying?
There’s a rule of thumb I share with clients, Every thousand dollars you borrow changes your payment about $5/mo.
Home buyers first timers especially find this an easy concept to grasp and I'd like to think it keeps them from overreaching (of course that's probably just me self-medicating)
The reverse is also true, every $5 amonth is the equivalent of $1000 in sales price and this is where HOA fees can be a problem. A $90/mo HOA fee is the equivalent of adding $18,000 in sales price.
If you had an approval letter at say, $170,000 would you show homes at $188,000?
The lesson is to apply the same due diligence to HOA fees that you do to property taxes. The easiest obstacles to overcome are the ones you identify in the beginning, rather than when you’re waiting for loan docs.