Unlike property taxes and insurance, HOA payments are not included in your escrow account. Your escrow account is designed to collect and manage funds for annual expenses like property taxes and homeowners insurance. The lender then pays these on your behalf when they come due.
HOA dues, however, are handled differently. Typically, you’ll receive an invoice from your HOA in December that covers the entire following year. This invoice is due by January 31st, and you’ll need to pay it in full to avoid any penalties.
Because HOA fees aren’t included in your escrow account, it’s essential to budget for these payments separately. This can come as a surprise for first-time homeowners who are accustomed to their escrow covering all their major annual expenses.
To ensure you’re financially prepared, it’s wise to set aside funds each month for your upcoming HOA payment. This way, when that invoice arrives in December, you’ll have the necessary amount ready to pay.
Failing to budget for your HOA payment can lead to financial stress when the invoice arrives. Missing the payment deadline can also result in late fees or penalties imposed by your HOA, adding unnecessary costs to your budget.
Understanding how escrow works and what’s included can be confusing. If you have questions about your escrow account, HOA dues, or how to effectively budget for your home expenses, contact Collette Horton at Liberty Star Mortgage.
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