In Orange County and neighboring cities, property taxes are based on the assessed value of your home, typically determined by the purchase price. Under Proposition 13, property taxes are capped at 1% of the assessed value, with additional local taxes for things like schools or public services. Taxes can increase annually by up to 2% regardless of market value changes. To estimate your total property tax, add local assessments to the base 1% rate. Property taxes are billed in two installments each year. Be sure to budget for taxes as part of your overall homeownership costs.

Homeowners insurance provides essential financial protection for your home. It covers damages to your home’s structure, personal belongings, liability for injuries or damages to others, and additional living expenses if your home becomes uninhabitable. Most mortgage lenders require this insurance. There are various policy types, with the most common being HO-3, which covers most perils except those specifically excluded. When choosing a policy, assess your coverage needs, compare options, and be aware of any exclusions such as flood or earthquake coverage, which may require separate policies.

Private Mortgage Insurance (PMI) protects lenders if a borrower defaults on a loan, typically required when the down payment is less than 20% of the home’s price. PMI costs vary, usually between 0.3% and 1.5% of the loan amount annually. It’s needed when the loan-to-value (LTV) ratio exceeds 80%. To avoid PMI, you can make a larger down payment, use a piggyback loan, or opt for lender-paid mortgage insurance (LPMI) with a higher interest rate. PMI can be removed automatically when the LTV reaches 78%, requested at 80%, or through refinancing if your home’s value increases.

HOA fees are payments made by homeowners in communities with a homeowners association (HOA). They help maintain common areas, manage community services, and cover administrative costs. Fees can be billed monthly, quarterly, or annually and may increase over time for inflation or special projects. Typical costs include landscaping, utilities, security, and reserve funds for future repairs. Review HOA documents before buying, budget for these fees, and stay informed through HOA meetings.

A home warranty provides financial protection by covering repair or replacement costs for major systems and appliances. It offers predictable costs, convenience with simplified repairs, and 24/7 service. Coverage includes essential systems like heating and cooling and can offer peace of mind, especially for older homes. It can also enhance home value when selling and provides access to pre-screened contractors. However, review coverage limits, exclusions, and provider reputation before purchasing.