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Why You Shouldn’t Buy a Home Warranty


A home warranty is purchased on the basis of covering the costs of major replacements or repairs in your home, but is the peace of mind only an illusion? If you’re unfamiliar with home warranties and perhaps considering purchasing one (or you recently have one), here’s what you need to know.

What is a Home Warranty?

Home warranty contracts can sound very appealing to a homebuyer. Any homeowner knows that owning a home comes with a lot of responsibility and expenses. From the moment you purchase a home, there are the expenses of moving, home inspection, realtor fees, and down payment. Then comes the monthly mortgage and insurance payments along with routine maintenance and upkeep. It’s no wonder homeowners purchase warranties with good intentions.

Home warranties are marketed as a means of financial protection for things like plumbing, electrical, heating and cooling systems, major appliances, and your hot water tank. Most home warranties or home inspection warranties are based on an annual service contract. This means you will pay a yearly fee for having the warranty, but that’s not the only cost.

Without a doubt, the problems most salesmen will talk to you about while trying to sell you a home warranty are costly. But, remember that if it sounds too good to be true, it probably is! Home warranties are profitable because the things that are actually covered are unlikely to break before your warranty is up and, if they do, you’ll still have to fork out additional cash to fix it.

Most often, the detailed fine print of the contract has many exclusions, leaving homeowners distraught and paying those repair costs out of pocket even after putting down all that money for a warranty that they thought had them covered.