Purchasing a Home Warranty

[Jacob Hafer]

Hi fellow BPers, 

I am currently going through the process of closing on my first property. As I am going through the process, I have been contemplating the idea of purchasing a Home Warranty or not. I am looking for some pros/cons of having a Home warranty. 

Any and all guidance is greatly appreciated!

Thank you,

Jacob Hafer

[Kevin Sobilo]

@Jacob Hafer, the first thing to realize is that if you purchase home warranties all the time forever you will spend MORE money than you will save. That is a given because warranty companies make a very good profit! They are basically a form of "insurance".

So, why would someone buy a warranty or any kind of insurance?!?

To me, it makes sense to buy only when the loss being covered is not something you are able to plan and budget for and where if it happens it will cause you a hardship you can't really handle. This is why we buy insurance to cover us in case a house burns down. We can't reasonably budget for that and if it happens it will be a real hardship without the insurance.

With a home warranty, the covered items fall under capital expenses and  maintenance which every landlord should be budgeting for. However, if you are struggling at first to build up those reserve funds and don't have resources to handle one of these covered losses right away it could make sense to buy a warranty until you are able to build up some reserves. However, in my opinion if you can avoid buying these you will obviously be better off in the long run.