When buying a home, you are faced with a stream of big decisions, many of which are critical to the process.

And just when you reach the point of total information overload, someone will inevitably ask you whether you want a home warranty.

Home warranty plans offer several attractive benefits for the home buyer, but they also add to your overall cost of buying a home. Let’s look at some of the pros and cons, so you can be better prepared to answer this question when it arises.

What Is a Home Warranty Plan, Anyway?

Think of it as a type of insurance policy that protects you from unexpected home repair costs.

Many companies offer home warranty plans, but their terms and costs are fairly consistent across the board. You pay one annual fee for the warranty plan (although most companies today offer a monthly or quarterly payment plan). Then, should you have a problem with a covered item or system, you simply call the company to request service.

The warranty company sends out a pre-approved local contractor to evaluate the problem  and ideally repair it for you  and you pay that contractor a set service fee. For example, if your refrigerator goes out, an appliance repair company will visit your home and evaluate the problem. If they can fix it, they will. If they cannot fix it, the warranty company will typically provide you with a new, equivalent model.

Either way, you pay only for the service call. This fee typically averages $75 to $85, depending on the plan you’ve chosen.

Most plans allow you to add coverage for a swimming pool, appliances and other optional items as well.

When You Should  and Shouldn’t  Consider Purchasing a Home Warranty

If youre buying an older home, or one that hasnt been well-maintained, a warranty plan may be a wise investment.

Most warranty plans cost less than $1,000. Replacing a failed AC compressor, water heater or pool pump will likely cost more than you’ve paid for the plan. If you find, after the first year, that everything seems to be working well, you can reconsider whether you want to renew your warranty coverage.

If you’re buying a home that is new (or newer), you may have less need for this protection, especially if the builder’s warranty is still in place.

A Few Final Words of Caution

Before you decide to invest in any home warranty plan, be sure to read the fine print.

Most home warranties do not cover the roof or other structural components of the house. Many also limit the amount of coverage they will provide for certain systems, and that coverage may be restricted. For example, if your water heater or some portion of the plumbing system is located outside your home, these may not be covered.

Some plans offer valuable extras as well. They may cover an annual tuneup on your HVAC system or provide for periodic pest control treatments. One company even offers free carpet cleaning services twice per year.

Ultimately, the decision to purchase a home warranty depends on how much you stand to benefit  or lose  if you chose to decline.

If you will be buying a home in Yorba Linda or the surrounding communities in Southern California, the Edie Israel Team can provide information and guidance about home warranty plans as well as the other questions that are likely to come up.

Trust the experienced, professional Edie Israel Team to help you negotiate the complex process of buying a home.