Do You Need a Home Warranty?

August 11, 2023

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A home warranty can offer certain financial protections for new homeowners. The warranty can help cover the costs of home repairs, including repairs for plumbing, HVAC, electrical systems and major appliances.

So, should you sign up for a home warranty? Find out below.

Home Warranties Explained

A home warranty is a contract that you sign with a home warranty company. Upon signing the contract, the company should provide you with discounted repair services for various elements of your home. The company has connections to service providers, who will be contacted to complete the necessary repairs and replacements that you need. You won’t have to spend any time searching for service providers, like plumbers or electricians.

You will have to pay monthly premiums to participate in this warranty plan. This is often $50 per month. You will also have to pay deductibles and service fees whenever you call in a repair or replacement. A service fee tends to range from $60 to $100 each.

The Downside of Home Warranties

A home warranty won’t save you from all repair costs. The plan will have plenty of coverage exclusions. For example, a poorly maintained appliance may not get coverage for repairs. This is similar to your homeowners insurance policy — if there are signs of homeowner neglect, your claim will likely be denied.

Your plan may also have dollar limits for certain repairs and dollar limits for the entirety of the year. You should check the limitations of your plan before you sign onto it.

So, what can you do when you need a repair, and your warranty can’t help you pay for it? In this stressful scenario, you should use your emergency fund to cover the repair costs. And if you don’t have enough savings sitting in your emergency fund, this would be an appropriate time to apply for a personal loan online. With an approved personal loan, you could use borrowed funds to cover the repair costs quickly and then follow a steady repayment plan afterward. You should click here to find out how to manage loan payments after you’ve finished covering the repairs. This will keep you on track with your billing cycle.

What Else Can Help You Save on Repairs?

Before you purchase a house, ask for a home inspection. Do not agree to purchase a home “as is,” unless you are willing to be surprised by repairs and replacements. Even if a home is completely new, you cannot be sure that there will be nothing wrong with it.

Home inspectors will only investigate components of the house that they can see. So, they will not be able to spot certain problems, like mold behind walls or drain problems. If you want to check for expensive plumbing issues, you can hire a plumber to inspect the home’s drains. This is especially important when the house is older because if the plumbing system hasn’t been maintained or replaced in a long time, there could be some serious issues under the radar.

How can this help you save money? Well, if the real estate contract has a home inspection contingency, you can decide to walk away from the deal if you feel like the future repairs will be far too expensive to handle. Or you can use the inspection results to negotiate a better deal for yourself:

  • You can ask the home seller to fix the problems before signing.
  • You can ask the seller to reduce the purchase price to compensate for the repair costs.
  • You can even ask the seller to provide a cash credit to cover the repairs after signing.

Essentially, your inspections can save you from paying full price for the property and all of its future repairs.

A home warranty could help you save some money on repairs — but not all of them. Make sure that it’s not your only safety net!


I believe in making the impossible possible because there’s no fun in giving up. Travel, design, fashion and current trends in the field of industrial construction are topics that I enjoy writing about.

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