Home warranties lessen repair costs, especially when homeowners insurance does not. Learn the pros and cons of buying a home warranty before or after closing.
The hard part is done: You’ve found your dream home. Now, after shelling out all that cash for a down payment and other moving expenses, you may be wary about spending even more money. In fact, you may be so eager to just get those front door keys that you find yourself wondering “Can I buy a home warranty after closing, so I don’t have to add one more thing to my list now?” We get it. Buying a house is stressful, especially if you’re a first-time buyer. And the short answer is yes. It's better to think about having a home warranty in place sooner rather than later, though. Remember that wariness about spending? Believe it or not, a home warranty actually helps you save money on inevitable repairs to those new home systems and appliances. Here’s what to consider when buying a home warranty after closing and what your options are.
The Importance of a Home Warranty
Obtaining a home warranty when buying a home is probably one of the smartest investments you can make. Why? Because your homeowner’s insurance only covers what could happen (like a fire or flood). A home warranty, on the other hand, covers what will happen (like an appliance breakdown). As much as we would all love to believe that a new-to-you home equals no future issues with its major appliances and systems, that’s just not realistic. With a home warranty, you can rest assured that those covered breakdowns will be resolved as quickly and efficiently as possible, with as little out-of-pocket costs to you as possible.
Options for Buying a Home Warranty After Closing
Your home can be covered by a warranty anytime, whether you’ve lived in it for a few months or several years. And your coverage options should remain the same, as well. Speaking of options, the best home warranty companies will provide several of them, so you can tailor a plan that meets your needs. Want basic coverage of your HVAC, electrical, plumbing, kitchen appliances and washer and dryer? Sure thing. Want to add on pool and spa coverage? You can do that, too.
Cons to Consider
Often, home warranties that are purchased before closing qualify for a lower rate. If you’re considering purchasing the warranty outside of closing, that could mean that you may have to pay a slightly higher premium for the protection. And, of course, just like insurance, a home warranty can be considered a “gamble,” since you’re not guaranteed to have to use it. What’s more important, though: spending a few hundred dollars protecting your budget or being stuck with a large bill when a major appliance breaks down in your new home — after you’ve already spent so much money? Also, some (or all) of your appliances may be covered already. If your house is new or if you purchased all-new major appliances and systems, they could still be under manufacturers’ warranties. It’s important to note, though, that these warranties typically only last 12 months past the purchase or installation date, and they only apply to the original purchase by the original owner.
Pros to Consider
It’s important to consider the age of your home and what the inspection report pointed out. If you purchased an older home with older appliances and systems, for example, home warranty protection should be a no-brainer. Also, consider the cost of obtaining a home warranty after closing — a few hundred dollars for a year of coverage — versus the cost to replace a major appliance. Who wouldn’t want that peace of mind while getting to know their new home? What’s more, without a home warranty in place, you could have a difficult time procuring a contractor to come out and make any necessary repairs. And you’ll be required to pay the service call fee plus potential additional fees. With a home warranty, you’ll only pay your fixed service call fee (likely much less than the company’s typical fee) for a covered service. Those savings really add up!
Thinking about further protecting your investment? Check out American Home Shield’s available home warranty options.