Do I need a home warranty?
/There is a lot of information in your average residential purchase contract, but one item that trips people up pretty frequently is the home warranty. You're already getting homeowner's insurance, so why on earth would you need a warranty, and why would the seller be willing to pay for it?
Your homeowner's insurance policy covers damage to your home and some things on your property, such as the tree falling on the car in the driveway scenario (which hopefully only happens in commercials). However, it probably doesn't cover your furnace, hot water heater, or appliances. That's where the home warranty comes in! Home warranties are becoming more common, with many sellers offering to pay one year of coverage for a prospective buyer, especially since many warranty companies will cover the home during the listing period for free if the home warranty is purchased at closing. The price for a year is usually between $400 and $500 in the Cincinnati area, with additional premiums for multiple HVAC systems, septic tanks, and other less common features. An added bonus: You can apply for a home warranty at any time, not just when you're buying or selling your home.
Not all home warranties are created equal. Comey & Shepherd works with HMS Home Warranty because they have a solid reputation for good service, but there are a lot of options out there so be sure to talk to your agent for advice. And if you have a little extra income, the best alternative to a home warranty is setting aside money each month for a home emergency fund. There a several ways to calculate this, but several sources suggest saving 1% of your home's value a year, or 1/12% each month.
