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PUD vs HOA – What’s the Difference for My Mortgage?

Another New England winter is just around the corner, and you may be deciding that you’re done shoveling snow once and for all. You’re moving to a condo or a homeowner’s association, and now you need to decide between PUD vs HOA.

At first glance, the distinctions between these two association structures may seem trivial. Yet, a closer look reveals significant differences that can impact experience as a homeowner, not to mention your mortgage.

Today, we’re clearing up what you need to know about the PUD vs HOA debate and how you can choose an arrangement that best suits your needs.

Ready? Let’s dive in.

What’s an HOA, and how does it work?

Short for “Homeowners Association,” HOAs are made of a community of varying units, either in the form of condominiums, townhouses, and even single-family homes.

HOAs are often responsible for providing a baseline of ongoing maintenance for the community of properties that comprise it. For example, if you live in a condo association, the HOA fees will maintain the lobby, landscaping, and even the personnel needed to oversee these repairs. Essentially anything that’s part of the “common area” of the HOA is covered by the collective fees, so individual homeowners don’t have to go out of their way to manage this upkeep.

Here are some typical examples of what kind of upkeep and services HOA fees cover:

  • Snow removal and snow management
  • Year-round landscaping
  • Swimming pools, tennis courts, clubhouses, & other recreational spaces
  • Budgets for upkeeping the association’s common areas

This is by no means an exhaustive list of the services that an HOA fee would cover for a contributing homeowner. They are, however, a general standard of what you can expect when moving into a duplex community, condo association, or even a cul-de-sac of single-family homes managed by an HOA.

It’s important to note that HOA members don’t own the land on which their property sits. Rather, they own the unit itself. The rules on how much agency a homeowner has depend on the bylaws of a particular HOA. In some cases, the homeowner only has control over the exterior paint inward. That means anything outside the home is not in the personal jurisdiction of the homeowner.

Additionally, HOAs are run by a board of directors. The residents of the association elect them. They are governed via bylaws and typically serve on a volunteer basis. As a fee-paying homeowner within the HOA, you have the right to inquire into and descent against the activities of board members who are not abiding by ethical standards.

What’s a PUD, and how does it differ from an HOA?

PUD stands for Planned Unit Development. As with an HOA, a PUD is a community of homeowners paying monthly dues into an association. Yet, there are a few key differences:

  • In a PUD, homeowners own the land on which their property sits, as well as the common area(s).
  • PUDs aren’t subject to Federal Housing Authority rules, whereas HOAs are.

Also, PUDs may own private roads and other amenities, yet even with a title for the property and land, you are still limited to the changes you can make to your unit.

Both PUDs and HOAs offer communal benefits as well as limitations for customization. It’s important to ask about each association you visit, as rules can vary between various associations, even within the same town.

For instance, some associations may only allow smaller-sized pets, while others may be unusually close together.

TIP: When searching for a home in an HOA or PUD, be sure to look beyond the property itself. Inquire into the association’s rules, amenities, and services, so you know exactly how much independence you’ll have to customize your home.

What PUD vs HOA means for your mortgage

Here’s where things get interesting.

Thinking about adding an addition to your home? Not so fast. The association may have rules in place that govern how each property can (or cannot) be structurally modified. The same goes for exterior paint colors, roofs, garage doors, and even front doors & all windows. Moreover, depending on how stringent your association’s bylaws are, you may need to obtain approval from a board before making serious changes.

Home values & qualification

Depending on the size of your PUD vs HOA fee, you may not be able to get a mortgage that you would otherwise qualify for.

It makes sense—a lender evaluates the entirety of your monthly payment, not just the amount they’re lending to you. Since most HOA fees allow you to roll your property taxes & mortgage payments into one monthly payment, this means your mortgage payment will technically be higher than the amount you’re initially preapproved for.

The higher your PUD or HOA, the higher your monthly payment. Suppose your income won’t comfortably keep up with this. In that case, the lender will have a less favorable view of your ability to maintain the loan, as your overall financial picture will have shifted to accommodate these added monthly costs.

Also, not modifying your home in the way you wish could impact how you may repurpose your home equity after a potential refinance. You’ll be limited to the kind of remodeling you can do, and any exterior work would likely need approval from the association.

There are plenty of benefits, too

Snow removal can be one huge benefit of living in a community wherein you pay monthly fees.

PUDs may also offer private roads, shopping centers, gated security, and a host of amenities reserved exclusively for residents.

There’s also the peace of mind that comes with knowing that not everything is your responsibility. For example, if you live in a condo tower and the central air system breaks down, there’s a good chance it will be taken care of by the association. The same can be true for power outages, parking accommodations, package delivery, and much more.

We can help you sort it out

When choosing between a PUD vs HOA set-up, it’s important to consider your monthly payment size and what it will do to your ability to carry a mortgage. It would help if you also considered how much structural latitude you’re comfortable with forgoing to reap the convenience of living in an association where many things are taken care of for you.

We help buyers just like you crunch the numbers and the facts, so they can make the move that’s right for them. Our expert loan officers are available to guide you through what a PUD vs HOA can mean for your journey to homeownership.

Contact us with any questions you may have about what association living will mean for your ability to become a successful homeowner.


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