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Are home warranties worth it on older homes?

Homeownership already comes with its fair share of responsibilities — never mind when that home comes with some age to it. Are you debating whether or not you should invest in a home warranty for your older property? Are home warranties worth it on older homes?

Here’s the truth: As homes age, the likelihood of encountering maintenance and repair issues increases, and that’s where a home warranty can come in handy. But let’s dig a little deeper.

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Understanding home warranties

The first thing you need to understand is how a home warranty works: It’s basically a contract that agrees to help you pay for repairs or replacement of covered systems and appliances that fail through normal usage. Unlike homeowners insurance, which covers damages from unexpected events like fires or natural disasters, home warranties focus on routine breakdowns and malfunctions.

Pros of home warranties on older homes

  • Budget Predictability: Older homes tend to have older systems and appliances that are more prone to breaking down. A home warranty can help you manage your repair budget through a predictable monthly or annual payment, rather than worrying about a large sudden expense.

  • Peace of Mind: Owning an older home can be stressful, wondering when the next repair bill will arrive. A home warranty can provide peace of mind, knowing that if something does go wrong, you have a safety net to fall back on.

  • Convenience: Depending on the home warranty company, you may have access to a network of pre-screened service providers that can save you from needing to locate a contractor yourself – but they may not be somebody familiar. If you prefer to hire someone local who you already know and trust, some home warranty companies allow you to choose your own licensed contractor for claims.

  • Negotiating Tool: If you're selling an older home, offering a home warranty can be an attractive incentive for potential buyers. It shows that you stand behind the home you’re selling.

Cons of home warranties on older homes

  • Coverage Limitations: Home warranties may exclude certain pre-existing conditions or place limitations on coverage. Make sure to understand what's covered and what's not.

  • Quality of Service: While some home warranty providers have reputable service networks, others might not deliver the level of service you expect. Read reviews and research providers before committing, or ensure you choose a home warranty that gives you the freedom to choose your own contractor

  • Duplicate Coverage: If your home systems or appliances are covered by extended manufacturer warranties or service contracts, a home warranty will typically decline coverage for these items.

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Making the decision

Ultimately, the decision to invest in a home warranty for an older home depends on your individual circumstances. Here are some factors to consider:

  • Age of Systems and Appliances: If your home's systems and appliances are approaching the end of their lifespan, a home warranty could be beneficial in helping you repair or replace them.
  • Financial Preparedness: Assess your ability to handle unexpected repair costs. If something breaks down, can your budget withstand the sudden expense?
  • Cost vs. Benefit: Calculate the total cost of the home warranty, including premiums and service fees, and compare it to the potential savings on repairs (an average of $160 - $360 per repair, according to HomeAdvisor). This can help you determine if the investment is worthwhile.
  • Provider Reputation: Research home warranty providers thoroughly. Look for reputable companies with a track record of good customer service and prompt claim resolutions.

Home warranties can provide valuable peace of mind and financial security for owners of older homes, especially if the systems and appliances are more likely to break down. However, careful consideration of costs, coverage limitations, and provider quality is essential before making a decision.

Assess your specific situation and priorities to determine whether a home warranty aligns with your needs and budget, then visit us on Facebook to tell us your thoughts!