Using a Home Warranty to Protect Your Wallet During Uncertain Times

It’s Well Known That A Home Warranty Can Save You Money 

Owning a home represents quite the financial burden. There’s a downpayment involved, if you get a mortgage you’ll have to pay that off incrementally–unless you buy a home so cheap you can use a personal loan, then you’re paying that off. If you avoid both, then you may have a backer you’ve got to pay.
However things turn out, you’re likely going to be on the hook for a few years. Few people are able to purchase a home with cash right away. And even those people, like you, will still have to foot the bill for maintenance and–perhaps worst of all–taxes.

You may have Home Owner Association (HOA) fees for your neighborhood, but this will depend on the neighborhood. Furnishings are also optional; though most people will fill their home with possessions.

Altogether, you’ve got a big package wrapped in a financial bow, and when the economy becomes questionable, how do you protect that package? That’s where a home warranty comes in. When you’ve got one, you not only protect what’s yours, you may well save money. Here we’ll cover how.

Warranties Cover A Lot Of Maintenance

Heating, cooling, plumbing, electrical–repair and management are expensive for these. A home warranty will cover their upkeep. And be advised, you will need to repair such appliances and amenities at intervals. The question becomes whether you pay out for the warranty, or for the contractors that string you along for a month on a job that really only requires an afternoon.

Through home warranties, your wallet doesn’t feel sickly every time get something fixed. Sure, there’s still the home warranty fee, which is several hundred dollars a year; but the problems described here cost several hundred dollars per problem, and you’re likely going to have at least one unexpected issue annually. One repair through your warranty annually, in many scenarios, shows how wise a purchase decision that protectoin is.

Typical Expenses

The average cost of a home warranty is variable, but even recently foreclosed homes still retain their previous warranties on occasion. Typically, expect a home warranty to cost $300 to $600 a year, with a standard service call fee somewhere between $75 and $125. You can explore more on that here.

Without a home warranty, air conditioner costs are between $163 – $520, for a furnace call you’re looking at $132 to $454, and most every other repair is similarly priced unless there’s some special issue. Here’s a link that compares and contrasts just for reference.

In no scenario is the minimum cost for a non-warrantied repair greater than the minimum cost on a warrantied repair. So say you got twelve non-warrantied repairs at $100 a piece; that’s $1,200. If you had twelve warrantied repairs at the minimum expense that year, you’d be looking at $900. The minimum average warranty cost per year is $300. So at minimum levels, that evens out.

But now let’s say you had two high-cost repair bills; both at around $500. Well, under warranty, you’re out $250, with a maximum warranty fee of $600, for a total annual expense of $850. Without a warranty, you’re at $1,000; meaning you lost $150. In ten years, that’s a loss of $1,500 you could have saved with a warranty.

The Bigger Picture

The real place you save with warranties is over the long-run. In ten years, you’ll pay $3k to $6k in warranty expenses for protection. That’s just $25 to $50 a month, or $.83 to $1.66 a day–it’s a parking meter fee. If average home maintenance is $1k a year without a warranty, you’re looking at a savings of $4k to $7k over ten years’ time, potentially. So at minimum, if you’re looking to stretch your budget as far as possible as long as possible, a home warranty is worth considering.