HOA Loan Success: 10 Crucial Questions for Your Broker

Introduction

We talk to tons of associations and property managers each month and while most of them couldn't be more excited to learn about our loan placement services, there are others that are skeptical. We often hear something like:

"We already know all of the banks that do this."

‍

"One of the board members is in finance, she knows what she's doing."

‍

"Our property manager has it under control."

‍

"Why would we pay you for something we can do on our own?"

‍

"One of the board members is in real estate, he's on top of it."

It's true, members of the board do have certain connections and some may be experts in real estate or finance. Maybe your property manager has already provided you with a banking option and you feel that's sufficient.

Our argument is always the same, what do you have to lose? With a financial decision this significant and consequential, wouldn't you want to turn over every stone possible? As HOA loan experts, we've seen it all and we can say confidently that the association could be missing out on a major opportunity to save a lot of money and the downside is negligible.

If you've made it this far, hopefully you've decided to give HOA Loan Services a chance at brokering the loan for your homeowners association or condo association. If you are still unsure, we've provided a list of questions you should be asking to make sure you select the right partner for your community.

What is a Homeowners Association Loan?

"An HOA loan is a type of loan taken out by a homeowners association (HOA) or condominium association (COA) to finance capital improvements and repairs to common areas or pay for other costs associated with running the community. The loan is usually secured using the collective monthly assessments paid by all homeowners in the community."

‍

Source: HOAloanservices.com

Who Qualifies for an HOA Loan?

This is a bit less straightforward, but in general any homeowners association, condominium association, property owners association, townhouse owners association or coop owners association is eligible for this type of financial product. In terms who who qualifies, each bank has a different set of underwriting criteria that they follow.

In general, if your community association maintains a low percentage of delinquent homeowners, keeps up with their monthly assessments and operates with valid documentation and an annual budget, then your association is a good candidate for an HOA loan.

What are the Benefits of an HOA Loan?

There are many benefits of a community association loan. Taking out an HOA loan can improve property values, help fortify reserve funds, solve cash flow issues for major repairs or upgrades and much more. There are two primary benefits of an HOA loan that I want to highlight.

First, HOA loans provide a valuable alternative to special assessments, allowing communities to cover unexpected expenses and capital projects without burdening homeowners. By spreading costs over time, individual finances are safeguarded, fulfilling the board's fiduciary responsibility to the community.

The second major benefit is the protection it offers to both board members and unit owners. Unlike a HELOC or a personal loan, with an HOA loan individuals are not exposed to personal risk, as the bank cannot place liens on properties or impact credit scores.

10 Crucial Questions to Ask Your HOA Loan Broker

1. Why should we use your services?

We want what's best for your community, that's why we sit on the same side of the negotiating table as you. Our services are risk free and with this type of specialized financial product, it's always beneficial to have an industry expert in your corner.

‍

2. Can you save us money?

We can't guarantee that we will save you money. We can guarantee that we will give it our best shot, the worst that can happen is we give you some free guidance before we part ways as friends. 

‍

3. What types of HOA loans do you offer?

Each lender is different in their underwriting process and therefore the types of loans available vary from bank-to-bank. Additionally, each association has unique needs, we take extra care to make sure your community is set up for success when placing a loan.

‍

4. How do you get paid?

 We don't get paid unless we close a loan for you. Contact us for more specific pricing information.

‍

5. Do you have any reviews?

 We certainly do, here are some of our most recent reviews.

‍

6. What's the risk if we don't use your services?

By not seeking expert advice, you risk missing out on substantial savings for yourself and your neighbors. Additionally, agreeing to an ill-suited loan structure may harm the community. As fiduciaries, fulfilling your ethical obligation requires due diligence in loan decisions.

‍

7. How is an HOA loan secured?

In simple terms, HOA loans are secured by the HOA's dues income. While it might sound complex, it's quite straightforward. In a mortgage, your house serves as physical collateral, but with an HOA loan, the collateral is intangible. If you default, the financial institution can collect the HOA's dues for repayment.

‍

8. Is my association a good candidate for an HOA loan?

Assessing eligibility for an HOA loan is nuanced. While many associations may seem suitable at first, delinquency rates, unit count, and dues income impact the decision. We evaluate each unique situation individually to find the best funding solution. Reach out to us for a personalized assessment.

‍

9. Can you assist in determining the appropriate loan amount?

 Yes we can. We provide comprehensive assistance throughout the loan process. Our services include financial modeling, community education, and active participation in board calls. With our step-by-step guidance, we'll build a compelling loan package that showcases your association in the best possible light.

‍

10. Are all the lenders the same?

No, not all lenders and HOA loans are created equally. Our expertise lies in understanding each lender's underwriting processes and loan requirements, enabling us to anticipate and address potential hiccups proactively. We've helped many associations that thought they had attractive loan structures but they turned out to be less favorable upon closer examination.

‍

Conclusion

When it comes to HOA loans, there’s no one size fits all solution. Finding the right HOA loan broker is a crucial step in securing the best financing for your community. By asking the right questions and considering essential factors, you can make an informed decision that aligns with your association's goals and financial well-being.

Remember, the right broker will be your partner, offering expertise, guidance, and a thorough understanding of your unique needs. At HOA Loan Services, we are committed to providing tailored solutions, financial transparency, and exceptional support throughout the loan process. Let's embark on this journey together, securing a prosperous future for your community.

‍
If your community is considering an HOA loan for funding needs, contact us for your free consultation.