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Should I Get a Home Warranty for my Home Purchase?

Going through the steps to purchase your home, you’ll come across the decision of whether to obtain a home warranty. There are many different options to choose from when it comes to picking a home warranty, but there’s also the thought that, maybe, you don’t need a home warranty?

What is a Home Warranty?

We’ll be focusing on home warranties, but it’s important to distinguish what exactly a home warranty is, what it could cover and what it couldn’t. Journalist and frequent contributor, Amy Fontinelle, often discusses home warranties and home insurances. She defines a home warranty as “a contract between a homeowner and a home warranty company that provides for discounted repair and replacement service on a home’s major components, such as the furnace, HVAC, plumbing, and electrical systems.” It’s important to note at this point that home warranties are entirely different than home insurance. Comparatively, home insurance encompasses “major perils such as fires, hail, property crimes, and certain types of water damage that could affect the entire structure and/or the homeowner’s personal possessions.” Different warranties and insurances will cover different repairs and scenarios. Before any decision is made, it’s important to understand what you want and what you’re looking to have covered.

The cost of a home warranty can differ, depending on your payment plan, or the type of home you purchase (single-family, townhouse, etc.). Some have customers pay in installments, whereas others can choose to have payments submitted up front. There are also basic or premium plans to choose from, depending on what’s necessary. 

Any questions you have about home warranties during the time of your home purchase can also be brought up to your Realtor® to discuss during negotiations with the seller(s).

Fontinelle notes that there are factors to consider when discussing whether or not to purchase a home warranty.

The Pros of Purchasing a Home Warranty

Obtaining a home warranty offers a variety of benefits for not just the home buyer, but also the home seller. 

  • A home warranty can be a safety net for any unpredictable problems that could happen, especially when buying a new home. 
  • There’s less work on your end in finding trained and insured contractors to help repair and fix any issues you have. 
  • As a seller, offering a one-year home warranty can protect them from any issues that are found after the buyers purchase the home. 

The Cons of Purchasing a Home Warranty

While having a package that helps you with certain issues, it may not be the best route for you. 

  • Alongside basic payments, most companies require you pay for a service call fee, a charge for every time you call in to request service. 
  • There’s no guarantee that a home warranty will cover everything you need repaired at that moment. This means you may have to pay out of pocket on top of paying for your plan and the service fees. 
  • Companies can deny your claim; having a home warranty doesn’t promise that everything will fall under their protection. 

Source: RetirementLiving.com

Where Should I Get My Home Warranty?

If you’ve decided to go with a home warranty for your purchase, it’s time to decide where you’d like to get your coverage. What companies have the best coverage? The best value? Consider looking for companies that have:

  • Nationwide-coverage for a variety of contractors
  • Free roof coverage 
  • Positive rating from the BBB as an accredited business company
  • Customization coverage options
  • Positive reviews to give you perspective from the consumer end

For a list of companies that offer home warranties, Consumer Advocate has made a list that offers different plans and options to fit your specific needs. 

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