By L.J.T. Reaves

Once you buy a home, you’ll be responsible for paying more than just the monthly mortgage payment and private mortgage insurance (PMI). Homeownership involves numerous expenses that are less than obvious when going through escrow. If you have owned a house in the past, you’ll be familiar with these “hidden” costs. On the other hand, if you’re a first-time homebuyer, some of them may surprise you. That can lead to a cash flow problem down the road.

In this article, we’ll describe several costs of homeownership in addition to your mortgage and PMI payments. Make sure you plan for them. In some cases, you may need to set aside funds far ahead of time.

Ongoing Maintenance And Periodic Repairs

Even while your house is brand new, you’ll need to devote time or money (or both) to ongoing maintenance and upkeep. For example, you might want to hire a gardener and housecleaning service. You may need to occasionally hire a plumber to fix minor problems.

Over time, you’ll also have to pay for repairs. Your roof may develop a leak; your air conditioner might break down; or, your hardwood floors might become water-damaged. These and other repairs can be costly.

Also, major appliances, such as your refrigerator or washing machine, will eventually need to be replaced. These too represent large expenditures.

Utility Bills

When you rent an apartment, most of your utilities and ancillary services are paid for by the property management company. While renters usually pay for their own electricity, the costs of gas, water, trash, and pest control, are included in their rent. You’ll need to pay for each of these when you own a home.

Also noteworthy is the cost of energy. The expense of heating and cooling an apartment is relatively low compared to that of a house. A house is bigger, and thus costs more.

Property Taxes

This is a cost of homeownership that takes many first-time homeowners by surprise. Property taxes are levied by local governments, and used to pay for roads, schools, and other services enjoyed by the community. The taxes represent a percentage of your home’s value, which is reassessed periodically. While rates vary across the U.S., they average 1 percent of a home’s value.

For example, suppose you buy a house for $300,000. 1 percent of that amount is $3,000, or $250 a month. If you fail to pay your property taxes (usually due twice a year), you may be forced to forfeit your home.

Homeowners Insurance

When you purchase a house, your mortgage lender will require that you buy a homeowners insurance policy. It covers theft and damage that occurs to your home, and provides financial protection from liability lawsuits stemming from injuries.

Most policies are relatively inexpensive (e.g. less than $60 a month). However, if someone is injured on your property, your premiums might increase substantially.

Occasional Remodeling Or Upgrades

Most homeowners remodel their houses at some point. For example, you might want to install hardwood floors throughout your home. Or, you may want to invest in granite counters. Some homeowners add one or more rooms to their properties.

You may also want to make major upgrades, such as improving your home’s electrical system. You might want to expand the capacity of your plumbing system. Or, you may want to add a chimney, install energy-efficient installation, and invest in a new burglar alarm system. Each of these home improvements can cost thousands of dollars.

Homeowner Association Fees

Many homes are located in communities that are managed by homeowner associations. These groups levy a monthly fee to pay for sidewalks, parking spaces, and to maintain the common grounds used by all residents. In some areas, these fees can reach $300 a month or more. You cannot opt out of homeowner association fees. Make sure you add them to your budget.

Most people find homeownership to be a deeply rewarding experience. But don’t neglect to plan for the “hidden” expenses that can otherwise bust your budget.

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