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Should You Buy A Home Warranty

“I’m buying a house.  Should I buy a home warranty?” Seems like a relatively tame question, but put it on Facebook and watch the impassioned responses roll in.

Everyone has their own experience, so expect to hear a few people call them ‘a scam’ or at the very least a waste of money.  Others will regale you with their tale of how having a warranty saved them from a sweltering summer because they couldn’t afford to fix their air conditioner without it.

In the end, the decision is personal and largely based on how comfortable you are paying out of pocket if one of the more expensive items in your home needs to be replaced.  Here are some things to consider when making your decision.

Know the cost

A basic home warranty costs between $400-$500 a year or more.  A warranty typically covers plumbing, hot water heaters, and all major systems.  More expensive or ‘enhanced’ plans can provide added coverage for things like your washer/dryer, refrigerator, septic system and garage door openers.

You can include the warranty at the time of closing on your home purchase, or if purchasing on your own later, you can typically break down the annual cost into more manageable monthly payments.  But remember, the cost of the warranty itself isn’t the only thing you’re responsible for paying.  Most home warranties include either a service call fee or a deductible, so it’s important to consider those factors in addition to the home warranty plan itself.

Consider your peace of mind

Many homeowners opt for a home warranty for major ‘just-in-case’ scenarios.  Just in case the air conditioning unit crashes and burns.  Just in case the hot water heater dies.  With the cost of some of these items running into the thousands, the peace of mind factor is huge.

For homeowners that don’t have large emergency funds, or want to protect those funds, a home warranty can act as a buffer.  It can also make sense for people who aren’t handy or don’t want to deal with finding a contractor.

Understand that not everything is covered

There’s always a chance that the item you need repaired is not covered under your home warranty for one reason or another.  Some problems simply won’t be covered by a warranty, and most home warranties won’t cover components that haven’t been properly maintained.  The lesson here:  Read the find print, so you’re prepared.