This Could Be the Biggest Home-Buying Mistake You Make

Don't fall into this common trap.

Buying a home could change your life -- for better or worse. On the plus side, owning your own home could mean enjoying more space, added privacy, and more financial freedom (think: no more worrying about your landlord jacking up your rent). 

On the other hand, owning a home could mean taking on a host of added expenses that leave you with less money for other bills. After all, it's not just a mortgage you sign up to pay when you purchase a home. You also have to cover the cost of things like property taxes, homeowners insurance, maintenance, and repairs.

But while getting to follow your own rules -- and not a landlord's -- may be one of the most appealing aspects of homeownership, in some cases, you may not get to call all the shots as expected. If you buy a home that's part of a homeowners association (HOA), you'll be subject to rules you may not get a say in. And that could end up limiting your ability to make the most of your new living space.

Be careful with HOAs

Just as some HOAs charge higher monthly dues than others, some HOAs are more restrictive when it comes to rules. But one of the biggest mistakes you can make as a home buyer is purchasing a home that's part of an HOA without fully understanding the rules involved. 

Some HOAs ban certain animals -- namely, dog breeds that have a reputation for being more aggressive. If you own a dog that falls into that category, or are hoping to adopt one, that could be a huge problem.

Other HOAs have rules about renting out your home. If you tend to travel a lot and are hoping to rent out your home on a short-term basis while you're away to bring in some income, that may not be an option if your HOA prohibits it.

HOAs can also make it so you're unable to operate a business out of your home. Often, this won't impact your ability to work from home, such as sit at a desk and type on a computer. But you could face restrictions about doing certain types of work out of your home, such as work that's noisy in nature.

Your HOA might also restrict you from operating a business that has clients or customers coming in on a steady basis. For example, say you're a self-employed hairdresser and your goal is to continue doing that work out of your home. Your HOA may not allow you to service clients in your home, limiting your ability to earn an income. 

Know what you're signing up for

You wouldn't sign a home purchase contract without reading its terms and conditions carefully. Similarly, you shouldn't buy a home that's part of an HOA before reading what its rules entail. You may find that the rules in question aren't problematic. But the last thing you want is to land in a situation where you're subject to rules that negatively impact your ability to earn money or make the lifestyle choices you want.