Should You Consider Cutting Out Your Home Warranty?

With the recent down turn in the economy, there are many things people are considering cutting out of their expenses. Home warranties was brought up in a recent discussion and I wanted to re-share this post from 2017.

When you buy a home, you will likely have the option to purchase a home warranty at closing. In many instances, the home warrant will likely be included in the closing costs of the home. It is typically not until the warrant comes due for a renewal do we start to ponder whether buying it again is a reasonable investment. With most of the warranties these day ranging from $300-$600, it can be a difficult decision to make. To make it easier, let’s discuss some basic ideas as to why or why not to buy a home warranty.

The Cost Comparison

How much are you willing to pay to ensure your home is working as it should? If your A/C unit or heater breaks down, how much is it going to cost you to have it repaired? If your refrigerator or dishwasher breaks down, what is the cost to replace it? Well, from experience with two of those items for which I had to pay out of pocket, it was close to $1,500. It can go much higher. However, had I bought a home warranty to cover them, it would have been covered or only be subject to a claim fee of $50. Thus, it would have been $500 for the warranty and $50 for the call. $550 sounds much better than $1,500.

What CAN it Cover?

Home warranties cover the basics such stove, dishwasher, microwave, garbage disposal, etc. Although some automatically cover A/C unit costs,  in most circumstances they have to be added. In the case of my A/C breaking down in the middle of Summer, it was nice to not pay a repairman to fix it. Instead, it was covered under my home warranty (parts and service). When buying a home warranty, make sure to read what coverages you have and what you might want to add on.

Older Homes Have Seen Better Days

When buying a new home, many do not think there is a point to purchasing a home warranty. This might be true to an extent. For older homes though, it would be wise to buy a warranty. Similar to how you are going to need to have a used car checked out by a mechanic more often as it gets older, the same is true with a home. As time progresses, things start to break down. This is especially prudent if you buy a home with the old appliances in it. The savings you could have simply from buying the warranty will be huge compared to what you will pay if you do not buy a warranty.

It Is Peace of Mind

Making a budget and sticking to it can be hard enough with all of the other items currently in your life. I certainly would not want to add to the stress of planning for the eventual demise of my appliances. Instead, I have chosen to purchase a home warranty to provide peace of mind these items will be covered if something ever breaks.

If you do decide to pursue the option of getting a home warranty, you can check out a great comparison here to better understand your options.