By Carolanne M. Chavanne, CFP
When buying a home, there are a lot of things to consider - including whether or not a home warranty is worth it. When you make a large purchase such as this, you know that money is probably going to be tight for a while. But the reality is, the unexpected can happen - including appliances breaking. Should you purchase a home warranty to help you out if something goes wrong? Read on to find out when you should buy a home warranty and when you will be better off without one.
What Is a Home Warranty?
Simply put, a home warranty is a contract that provides a homeowner with discounted repair and replacement services of specified packages.
Warranties usually cover:1
- HVAC repairs
- Kitchen appliances
- Washer and dryer
- Pool repairs
- Plumbing issues
- Electrical issues
Home warranties are different from homeowner’s insurance since your mortgage requires you to purchase one while a warranty is completely optional.
Do You Need a Home Warranty?
Some questions to ask yourself when it comes to deciding whether to purchase a home warranty include:
- Should I be worried based on my inspection report?
- Are the risks I would be purchasing a warranty for already covered by builders’ warranties?
- Are my appliances covered by extended warranties that some credit card companies already provide?
If any of these questions have you worried that you are not properly covered, then a home warranty may be a good option for you. If you are already covered and your inspection went well, it’s possible you may not need a home warranty at all.
How Can You Choose a Home Warranty?
When searching for a home warranty, carefully read what each one entails before you purchase it. The language can be incredibly technical and there is a lot of fine print, so ensure that you are reading everything thoroughly before purchasing one.
Additionally, some homeowners may sell their house with a warranty included, so make sure you are still reading everything through, as you shouldn’t simply take the seller's word for it.
Purchasing a home is a big responsibility in itself, so deciding if you should purchase a home warranty is just one more thing to think about. In the end, if you find one that best suits your needs and provides the coverage that you need, then just make sure you are reading everything thoroughly before making the purchase.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.