What Monthly Costs Come With Owning a Home in Orange County?

Your mortgage payment usually has four parts, often called PITI:

• Principal. The part that pays down your loan balance.
• Interest. What the lender charges to lend you the money.
• Taxes. Your property taxes, if your lender collects them.
• Insurance. Your homeowners insurance, if your lender collects it.

I'm Jeanette Nelson, a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas. When a first-time buyer asks what a home will really cost, I want them looking at the full monthly number, not just the loan payment.

The Consumer Financial Protection Bureau (CFPB) explains that with an escrow, or impound, account, your lender collects part of your taxes and insurance each month and pays those bills for you. If taxes or insurance go up, your payment can go up too.

The Orange County Assessor sets your assessed value, and the Treasurer-Tax Collector bills and collects the tax. The Treasurer-Tax Collector lists two installments each year. The first is due November 1 and becomes delinquent after December 10. The second is due February 1 and becomes delinquent after April 10.

If you have an impound account, your lender usually pays these for you. If not, plan to set money aside every month so the two bills don't catch you off guard.

Two more items to know:

• Supplemental tax bill. The Treasurer-Tax Collector explains that new owners usually receive a supplemental bill after a purchase, and mortgage companies usually don't pay it, even with an impound account.
• Homeowners' Exemption. If the home is your main residence, the Orange County Assessor's exemption takes $7,000 off your assessed value. The Assessor's deadline for the full exemption is February 15.

For more detail, see How Are Property Taxes Set When I Buy in Orange County?

Homeowners insurance. Your lender will require it. Condo owners often need their own policy for the inside of the unit, while the HOA carries a master policy. Ask the HOA what its policy covers.

Earthquake insurance. The California Department of Insurance explains that standard homeowners, renters and condo policies don't cover earthquake damage. Fire that follows an earthquake is covered. Your insurer must offer earthquake coverage every other year. Whether you buy it is your choice, and it adds to your monthly budget if you do.

Flood insurance. It's a separate policy. Your lender may require it depending on where the home sits, and some owners buy it even when it isn't required. Ask your insurance agent to quote it early.

HOA dues. Many condos, townhomes and planned communities in Orange County have an HOA. Dues cover shared costs and can include things like common area upkeep, the master insurance policy and amenities. California Civil Code Section 4525 requires the seller to give you the HOA's governing documents, its most recent budget disclosures and a statement of current regular and special assessments. Read them before you remove your contingencies.

Mortgage insurance. If your down payment is less than 20% on a conventional loan, you'll likely pay private mortgage insurance, or PMI. The CFPB explains you can ask to cancel PMI once your balance reaches 80% of the home's original value, and it generally ends automatically at 78%, as long as you're current on payments. FHA loans have their own mortgage insurance rules, so ask your lender how long yours lasts.

• Utilities. Electric, gas, water, sewer, trash and internet. The CFPB notes these vary widely with the home's size, age and energy efficiency.
• Maintenance and repairs. The CFPB's monthly payment worksheet mentions a common rule of thumb of about 1% of the home's price each year, divided by 12 for a monthly amount.
• Special assessments. Some homes carry extra charges on the property tax bill, and HOAs can add special assessments for big projects.

Your inspection report, covered in What Should I Expect at My First Home Inspection?, can help you see which repairs may come sooner.

If you want to see the full monthly picture for a home you're considering, I'd love to walk through it with you and your lender. Call or text me at 714.366.8575 | DRE: 01397168, or contact me. Jeanette Nelson is a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas.