6 Things to Know Before Working With an HOA Lender
An HOA loan is funding borrowed from a lender that will be paid back with interest over time. You can utilize the financing for capital improvements or repairs to help restore the property or enhance the area's overall value.
There are some critical pieces of information to have before reaching out to a lender, and here are a few examples.
A standard requirement to gain a loan through a lender is to have at least the past three fiscal years of records. The current year's financial information, delinquency report and the operating budget may also need to be included in the paperwork required.
Your association also may be required to show proof of current insurance. The plan helps protect the HOA in situations where there may be medical bills, repairs, or lawsuits with coverage specified in common areas of the property.
How Will the Loan Be Paid?
You may need to provide a budget to show the different sources of income the property is providing, so the bank understands the options your association has planned to pay back the HOA loan.
There can be multiple ways an HOA community can raise money aside from monthly dues, so whether you are renting out your clubhouse or planning on cutting costs, be sure to list these activities.
Does Your HOA Board Have Experience With Capital Planning/Reserve Study?
Having a capital plan means there is a map that details what items will be addressed over a specific period. Supplying this to the lender shows there is a guide in place to ensure that the financing provided is paid back on time.
Are There Any Delinquencies?
One of the other things you may have to provide is listing any delinquent homeowners with the properties. This could be tenants in foreclosure, behind on paying their monthly dues or financial incidences such as bankruptcies or financial mismanagement that has taken place.
HOA Capital: Streamlined Loan Options for Your Community
Don't let community upgrades cause you to worry! When it comes to HOA loans, you want to make sure that you work with a lender who strives to streamline a solution for their client's needs. HOA Capital wants to make your loan process as uncomplicated as possible by offering customized loans and HOA lending consultation.
We specialize in HOA management solutions and work hard to get you the funding you need to keep your property in the best condition possible, so contact us today or call us at 952-836-9593.