How to Determine if You Need to Buy a Home Warranty
Learn what coverage you already have., Read the fine print to see if it is worth the cost., Start an emergency fund instead.
Step-by-Step Guide
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Step 1: Learn what coverage you already have.
When determining if you need a home warranty, always consider the coverage that you already have.
For example, if you bought a newly built home, home systems and appliances usually have one-year warranties.
Additionally, most states require that builders warranty the house’s structural elements for up to 10 years.
You can also use a credit card that extends a product’s warranty for up to a year when buying new appliances and furnishings.Find out how old your home is to determine if its structural elements are still covered.
Here are some ways that will help you figure out the age of your house: examine the visual character and architectural style of the house, check the title, ask your neighbors about the neighborhood, visit the tax assessor at your local City Hall, and/or visit the county register of deeds at the Registrar’s office. -
Step 2: Read the fine print to see if it is worth the cost.
When buying a home warranty, always read the fine print to see exactly what the warranty covers.
Warranties usually cover basic things like the inside electrical system, appliances such as your refrigerator, heating and air conditioning, and interior plumbing.
More importantly, determine how the warranty will cover your appliances; there may be exclusions and limitations.For example, ice makers in your fridge, which usually break down, are not covered.
Many home warranties do not provide coverage if your appliances have pre-existing issues, if you did not maintain the appliance, if it was installed incorrectly, or if the appliance has wear and tear.
Do not assume that your warranty will replace your appliance; they usually opt to repair it instead.
And, do not assume that the warranty will cover the entire cost. , Many homeowners who do not have an emergency fund, i.e., money set aside in case an appliance or some part of the structure breaks down in the home, opt for a home warranty.
This is usually the case with new homeowners, who have just depleted their savings to buy a house.
However, if you have the money to set aside for an emergency fund, experts recommend that you start an emergency fund instead of buying a home warranty.
The size of your emergency fund will depend on your income.
However, as a general rule of thumb, your goal is to have an emergency fund that will cover four to seven months’ worth of expenses.
Establish a monthly savings goal, and have money automatically transferred to your savings account each month.
In the beginning, your savings goal can be small, but try to increase it over time.
Do not use your emergency fund to cover other expenses, like entertainment and personal expenses.
To avoid this, make access to the savings account relatively difficult. -
Step 3: Start an emergency fund instead.
Detailed Guide
When determining if you need a home warranty, always consider the coverage that you already have.
For example, if you bought a newly built home, home systems and appliances usually have one-year warranties.
Additionally, most states require that builders warranty the house’s structural elements for up to 10 years.
You can also use a credit card that extends a product’s warranty for up to a year when buying new appliances and furnishings.Find out how old your home is to determine if its structural elements are still covered.
Here are some ways that will help you figure out the age of your house: examine the visual character and architectural style of the house, check the title, ask your neighbors about the neighborhood, visit the tax assessor at your local City Hall, and/or visit the county register of deeds at the Registrar’s office.
When buying a home warranty, always read the fine print to see exactly what the warranty covers.
Warranties usually cover basic things like the inside electrical system, appliances such as your refrigerator, heating and air conditioning, and interior plumbing.
More importantly, determine how the warranty will cover your appliances; there may be exclusions and limitations.For example, ice makers in your fridge, which usually break down, are not covered.
Many home warranties do not provide coverage if your appliances have pre-existing issues, if you did not maintain the appliance, if it was installed incorrectly, or if the appliance has wear and tear.
Do not assume that your warranty will replace your appliance; they usually opt to repair it instead.
And, do not assume that the warranty will cover the entire cost. , Many homeowners who do not have an emergency fund, i.e., money set aside in case an appliance or some part of the structure breaks down in the home, opt for a home warranty.
This is usually the case with new homeowners, who have just depleted their savings to buy a house.
However, if you have the money to set aside for an emergency fund, experts recommend that you start an emergency fund instead of buying a home warranty.
The size of your emergency fund will depend on your income.
However, as a general rule of thumb, your goal is to have an emergency fund that will cover four to seven months’ worth of expenses.
Establish a monthly savings goal, and have money automatically transferred to your savings account each month.
In the beginning, your savings goal can be small, but try to increase it over time.
Do not use your emergency fund to cover other expenses, like entertainment and personal expenses.
To avoid this, make access to the savings account relatively difficult.
About the Author
James Rivera
Enthusiastic about teaching DIY projects techniques through clear, step-by-step guides.
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