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5 Things to Do Before Taking Out an HOA Loan


Most homeowners association budgets cover day-to-day maintenance and smaller improvement projects. There are times when your community may want to tackle a larger, more costly project or perhaps something unexpected happens that suddenly requires additional funds.

The most common needs of community associations include capital improvement projects or necessary structural repairs. Alternatively, community associations may need to turn to a financial institution for lending on urgent repair projects such as water damage, elevator, windows, or internal pipes and sewer issues.

Before deciding if a loan is the right avenue for your community, here are five items to consider:

Ask the question: Can we borrow? Check the governing documents and consult your association attorney to assure the association has the legal authority to borrow.

Evaluate the project. Before doing anything else, spend some time outlining the project. What’s your timeline? Is this an urgent need, or can it wait a few months? If you’re renovating a community pool, for example, do you need the project to be finished before the summer season? How much money do you already have in your reserve funds to cover the cost of the project, and how much more will you need?

Know the cost for repayment of the loan. A key benefit of community association loans is that the project can be completed at one time rather than in multiple stages for cash flow purposes. Securing a loan will take the strain off individual homeowners to supply a large amount of funds upfront. Instead, homeowners will be able to divide the cost over time through a special assessment or an increase in the regular assessment. Decide whether there is a need to increase regular assessments, initiate a special assessment, assign funds from the current budget, or a combination of these sources.

Compare the types of loans available. Board members will want to evaluate loan products to find the best option for all of their homeowners. Consider term length, rate, fees, processing times, etc. Pacific Premier Bank offers a traditional standard loan, a streamline loan, and a line of credit. Our standard loan can be customized with flexible terms and rates. Our streamline loan product offers a 3–5 day approval and limited underwriting documentation.  

Find the right financial partner. When searching for a financial partner, a community can seek referrals from their management company, search CAI’s Professional Services Directory, or find a lending institution through a state industry trade organization. Partnering with a bank that understands common interest community associations is vitally important and will ensure a smooth process for all.

As your financial partner, Pacific Premier Bankers are available to discuss options and develop customized solutions for your community association. Contact us to review any upcoming projects or community lending needs at [email protected]

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The information expressed is being provided for informational and educational purposes only. It is not intended to provide specific advice or recommendations for any individual or business. Pacific Premier Bank does not provide tax, legal or accounting advice and the information contained herein should not be construed as such. You should carefully consider your needs and objectives before making any decisions. For specific guidance on how this information should be applied to your situation or business, you should consult your own tax, legal and accounting advisors before applying any recommendation. All loans subject to credit approval.

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