Being a first-time homebuyer is exciting, but it also brings up a lot of questions. During the buying process, your agent may mention that you have the option to purchase a home warranty. This is a matter you may not have thought about before, but definitely requires some consideration.
Home warranties are supposed to help protect buyers financially. Essentially, what they do is cover some or all of the cost of repairs to home systems. Some warranties also cover appliances like refrigerators, washer/dryers, and swimming pools.
Home warranties must be paid for every year and can cost several hundred dollars. As a first-time homebuyer, you may be wondering, is the expense worth it? Here’s what you need to know.
Are Home Warranties Worth the Cost?
Unfortunately, there’s no sure answer. It’s hard to say whether your home warranty will pay off because you can’t predict the future. Some homeowners never need to use their warranty while others end up using it to cover major expenses like HVAC or furnace repairs. Furthermore, all home warranties are different in terms of coverage. Some are more comprehensive while others are limited. Therefore, you have to use your best judgment.
Pros & Cons of Home Warranties
When deciding whether or not a home warranty is right for your situation, it may be a good idea to look at the pros and cons.
Benefits of a Home Warranty
- Peace of mind: Some buyers choose to purchase a home warranty simply because it provides them with peace of mind and makes them feel more comfortable.
- Hassle-free repairs: If you’re not the fix-it-yourself type, you may appreciate having someone else take charge of the repairs.
- Financial protection: If you’re depleting the majority of your savings to purchase your home, then a warranty could provide financial protection.
- May cover expensive appliances: If you have expensive taste in appliances, then you may want to find a warranty that covers them.
Disadvantages of Home Warranties
- Improper maintenance: If systems or appliances in your home were not properly maintained by yourself or a previous owner, the warranty company may not cover the repairs.
- Added expense: If you’re already tight on cash due to closing costs, you may choose to skip the warranty simply due to the added expense.
- May not cover everything: Home warranties are limited in what they cover. Keep in mind that your warranty may not cover all repairs. It’s important to do your research and understand the clauses of your warranty thoroughly.
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