Home Protected with a Warranty

When Should You Consider A Home Warranty?

As the old saying goes, "when it rains, it pours."

As homeowners, we're all too familiar with how true that is. Within the space of a week, your hot water heater went out, your sewer line backed up, a falling branch took out your gutters, and now you've discovered a leak in your dishwasher.

The hits keep coming, the bills keep piling up, and your list of home improvement projects has to wait even longer.

A home warranty can come in handy when things break without breaking the bank, but is a home warranty worth it?

If you've been wondering whether or not you should get a home warranty for your house, we're here to answer. Read on!

Home Warranty vs. Home Insurance

Many homeowners think that because they already have home insurance, they don't need to purchase a home warranty. However, these two policies are very different.

Home insurance, which is required by most mortgage lenders, can be a godsend when disaster strikes. If you suffer damage from a fire, storms, falling trees, theft, or other issues, home insurance can help you make those repairs without too much extra cost.

On the other hand, if your HVAC goes out, your plumbing fails, or an appliance breaks, your home insurance policy may be as helpful as the piece of paper it's printed on.

This is where a home warranty comes in.

For only a few dollars per month, a home warranty covers most things not already protected by your home insurance policy.

This policy affords you steep discounts on replacement or repairs on almost everything in your home. If an appliance isn't covered by the basic plan, you can add it on for a few dollars a year.

Cost of Home Warranty vs. Cost of Repairs

A home warranty might run you between $25 and $50 per month, adding up to $300-$600 per year. If you aren't facing any major repairs, this might seem like throwing money down the drain.

But consider this. If one of your major appliances stops working, it costs an average of $171 to get it running again. If it can't be repaired, you'll have to replace it out of pocket—sometimes to the tune of several thousand dollars.

Let's say that after living in your house for five years, your furnace needs to be replaced. This could cost over $4,000. Yet in those five years, you've only spent $1,500 on payments toward your home warranty. That's $2,500 you've saved!

If you have just two repairs per year, your home warranty could end up paying for itself. Depending on the age of your home and the appliances within it, a home warranty could save you a small fortune.

When Can I Buy A Home Warranty?

Most typically, when you first purchase your home, you will be given the option to buy a home warranty. This is always a good idea, but some homebuyers would rather skip the extra fee and save that money instead.

The good news, though, is that you can purchase a home warranty at any point.

However, there is one big caveat...

If you purchase a home warranty after something breaks, the warranty won't cover that repair or replacement. The warranty only covers things that fall into disrepair while the policy is in effect. In this case, prevention is worth far more than the cure.

If you know that your appliances are reaching the end of your life cycle but are still operational, a home warranty is a great idea. Just make sure you start a policy before you start to have issues.

When Can I Skip A Home Warranty?

While a home warranty can be invaluable to many homeowners, it's not always the best option for every circumstance.

If your home is a new construction, there's a good chance that the builders will have guaranteed their work. If the construction fails or the materials are faulty, it may already be covered by the builders.

Similarly, most new appliances are covered by a manufacturer's warranty for the first several years of their lifespan. Many companies offer extended warranties for an additional charge on top of the item price.

For example, a hot water heater may include a free five-year warranty, but a ten-year warranty can be purchased for around $100.

If your home is less than five years old, or if the appliances have recently been replaced, there's a good chance that everything in your home is already covered by the manufacturer's warranties.

In this case, a home warranty would offer little additional protection. You'd be better off saving that money for home improvement projects or making extra payments to your mortgage principal.

But, before you decide to skip a home warranty, take a close look at what is included in the manufacturer's warranties. There may be a gap between what is actually covered and what you think is covered.

Is a Home Warranty Worth It?

As a homeowner, you've probably asked yourself, "is a home warranty worth it?" For most homeowners, the answer is an emphatic, "yes."

Would you rather shell out hundreds of dollars every time something breaks, or pay a few dollars a month to make sure that your home is covered? Looking at the savings over time, there's no question of the value of a home warranty policy.

If you've decided that a home warranty is for you, follow this link to get a free, customized, no-obligation quote.

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