A Home Owners Association is a group of people who live in a common or given area. Most Condominium complexes and Planned Urban Developments will have associations which are formed to help maintain and improve the quality of the common area.
Usually, these Home Owner Associations (HOA) require you to make a monthly payment. These fees can be included into your loan payment per month and taken care of by your lender. This works the same way as your property taxes.
Part of you association fees will go toward providing hazard insuranced on all of the homes in the community. This insurance will typically only cover the structure itself, and not your personal property. For this reason you should look into taking out renters insurance to replace your belongings in the event of a fire, theft, etc.
Make sure that you get to read the HOA's rules and regulations before you buy the house. Many HOA's have strict rules on what can be done and what can not be done to the house.
Some HOA are so strict that they have someone driving around to ensure that everything in the community is in compliance. Some communities have members of the assocation (people who live there) actually report people also. After all, this is for the benefit of the community you buy into. Definitely understand the HOA policies before purchasing a home that has HOA. If you don't agree with it and don't want to comply with it they may want to look into other communities without HOA.
You can expect a steady rise in the cost of your HOA dues every year.
Many people in retirement prefer to live in developments with a Home Owner Association such as condominiums because condos provide the convenience of property management. Residents in these condo developments never have to remove snow in the winters and mow the lawns in the summers.
An HOA is a useful tool to preserve the property values of a neighborhood. Their tight covenants and restrictions prevent junk cars and unkempt lawns from ruining the appreciation rates of the neighbors. Be sure to carefully read the Homeowners Association agreement prior to committing your self to a property or signing a contract.
