Home Warranty Blog and Resources

Saving for a house can be a daunting task, but is one of adulthood's most exciting milestones. You're settling down into a new home, but you're also giving up a large sum of your money in the process. So, how do you prepare for such an important purchase? The obvious thing to do is to put aside money from your income and save it for a down payment. But how can you do this without breaking the bank and becoming completely overwhelmed? Identifying unique saving techniques that will work better than or in addition to your current saving methods can be stressful. Well, that’s where we come in. We’ve done the research for you and asked financial experts, homeowners, and real estate agents what they advise potential homeowners to do when saving for a house. Here are some ideas that can help you on your journey to home sweet home: Save Expected Monthly Mortgage for a Year Jimmy Thai bought his first home a year and a half after his college graduation, and from there he purchased additional rental properties every three years. As you can see, he definitely had success with his money-saving efforts. Thai suggests, “Put away your expected monthly mortgage payment for a year to see if this discipline impacts your spending and/or lifestyle. After a year, either you have 4% toward your down payment and know how to deal with a mortgage payment, or you learn that you are not ready for a mortgage obligation.”Although Thai’s advice may take a little longer to implement into your saving routine, it is definitely worth considering. This way, you not only know if you’re ready to handle a mortgage payment, you’ll also have the experience of paying one, so you won’t be ill-prepared when you do finally own a home. Cut Back on Costly Habits Desare Kohn-Laski, broker and owner of Skye Louis Realty, shared this tip: “We all know when trying to save for a house that budgeting is essential. But what about the simple ways of saving that don’t require you to balance a checkbook every time you swipe a card? Think about that one daily or weekly purchase that probably has a less expensive option. For example, if your kryptonite is a Grande latte from Starbucks every morning, try kicking it old school for a while and making a cup of coffee at home before work. (Keurigs are lifesavers). Even if you don’t have a caffeine addiction, I’m sure there’s one weekly treat you give yourself, whether it’s eating out or Happy Hours after a stressful day at the office. Cut back on these small expenses and watch your bank grow.”Kohn-Laski’s advice is a simpler approach to saving money that could help you save money without breaking the bank. Habitual purchases such as getting a daily or weekly coffee can really add up. While cutting back and putting that money towards your house instead may seem small at first, like Kohn-Laski said, soon enough you will see your bank account start to grow. Try House Sitting Kelly Hayes-Raitt, a blogger and published author who discovered housesitting as an appealing way to save for a house, offered this unique advice: “I save money by not paying for accommodations. I house sit around the world where I live in other people's homes at no cost in exchange for caring for their pets while they go on vacation.” She adds: “Not only do I save money for my own home, but I ‘try out’ communities by house sitting. And, by living in a variety of apartments and condos, I learn what features are important to me that I'd like in my own home.”Hayes-Raitt’s advice, although unconventional, could be a great way to avoid paying certain living expenses and to “try out” communities and find out what you want in a home and neighborhood. Some people may not be able to house sit as often as she did, but if you have the time and the resources, this is certainly something to consider that could help you save money for your future house. Take Advantage of Partnering Options Keith Jenkins, an experienced real estate agent and investor, lent us some of his honest advice on how to save for a house without having to use your own money: “Really the best idea for saving for a house is not to! It is totally possible to purchase a house with none of your own money. Many people use ‘no money’ as an excuse as to why they cannot own a home. But if everyone waited until they had enough money... they probably would never ‘own’ a home. The best way to purchase property is with other people's money (OPM). Partnering on deals will help a new homeowner gain experience, and take most of the risk out of the deals.”Jenkins also gives us insight into his own experiences: “Personally I've even partnered on a deal and purchased a house with none of my own money and none of my own credit. To the truly serious, money is not an issue when it comes to becoming a real estate investor, or a first-time homeowner.”Jenkins's advice is especially something to consider when you don’t have a lot of your own money to put up but you are looking to purchase a home sooner rather than later. He reminds us there are other options even when you feel like there are none. Utilize Money-Saving Apps Chasen Nick, a Digital Marketing Strategist for RAMS Home Loans, one of Australia's largest lenders for first time home buyers, had a specific strategy when asked for his advice about saving money for a home: "My favorite way to save and manage my money is by utilizing an app called Qapital. The app gives you the ability to set up an automated savings account where you decide what triggers a deposit. It’s kind of like a game in which you make up a rule that allows you to round up your extra change each time you buy something with the card that’s connected to your Qapital account. So let’s say you create a rule that rounds your purchases up to the next $5 and you spend $7 on a purchase, then $3 will be placed into your savings account. Over the span of three months, I’ve managed to save almost $1,000 without even realizing the money was gone." Nick adds, “When you stay informed of how much money is in your account at all times, it allows you to budget differently.” Nick’s advice is a unique approach to saving money that is most likely different from what you are currently doing. It doesn’t require much money out of pocket, but it adds up with every purchase you make. Start Your Own Business Deborah Hanamura, Executive Director of Marketing & Communications for Paladino and Company, provides a more traditional route for money saving. Hanamura recently bought a house in the intense and competitive Seattle real estate market. She and her husband started from scratch when they began to save for the house and she says, “The way we saved wasn’t necessarily innovative or surprising. But essentially my husband started a side business that he could do on the weekends and evenings, and we saved every penny from it to produce a down payment in the span of about 18 months. Now that we’ve bought the house, he is continuing to do some work, but not nearly at the pace that he was when we were in saving mode.” Be Transparent about Your Goals  Hanamura also explains, “I was also very transparent with people about my goals. I did not travel for weddings, holidays, etc. because it certainly didn’t make sense for him to work that hard only to spend it on airline tickets. And while we did things, like I would challenge myself not to buy any clothes for six months, and I brought my lunch to work every day, we did still remember to enjoy ourselves and take the occasional weekend getaway.”  Consider Working with a Financial Planner Hanamura continues, “We also worked with a financial planner, and we established some smart guidelines about how to divide our contributions to our retirement plans so that our future financial security wouldn’t be compromised by our downpayment goals. In the end we were able to handle the down payment, closing costs, appraisal gap, and moving expenses without touching our safety net of savings.” Keep Your Eyes on the Prize  Hanamura ended by saying buying a house became a reality in less than two years because she and her husband kept their eyes on the prize without becoming distracted by unnecessary expenses. Regardless of what money saving methods you are using now or decide to use, Hanamura’s experience shows us that whatever you do to save money, commitment is key. Pay off Credit Card and Other Debt First John Reinmuth, a Certified Financial Planner, suggested the first step to saving money for a house should be to “pay off any credit card or consumer debt first.” Reinmuth identifies two benefits to having a zero balance: "It improves the buyer's credit score. It reduces the percent of the buyer's income already allocated to debt servicing. Both the credit score and the total of current debt factor into the lender's willingness to underwrite a loan. The improved credit score and eliminated debt increase the likelihood of qualifying for a mortgage with less than a 20% down payment. This, in turn, reduces the money needed for the down payment. Thus, they have the same effect as increases the saving for a house down payment. While paying off these debts, the potential home buyer should avoid making credit card purchases until any continuing balances have been paid off." If you’re uncertain about how to pay off your credit card debt effectively, consider an automated debt management app such as Tally. According to personal finance expert Bethy Hardeman, “Tally helps people overcome their credit card debt by determining the smartest and fastest way to pay it down, then actually takes action for them based on this information. Tally is able to save people money in two ways - by giving them a lower interest rate and by helping them manage their payments, guaranteeing they will never pay a late fee again.” Ask Loved Ones to Match Your Savings Reinmuth has another, more creative tip for putting aside a down payment: "Ask parents to match your increased savings: Dollar for dollar, 50 cents per dollar, or some other ratio. A gift facilitates a mortgage down payment much better than a personal loan. The lender will ask for a written statement regarding whether parental participation is a gift or loan, and will add any loan amount to other debt servicing. My wife and I matched savings for my son and daughter-in-law to purchase their first house in 2000. This encouraged them to look for as many ways as possible to save, as each $1 they saved in effect became $2. At the time of our gift, we had already determined that our savings and pensions were sufficient for retirement." Reinmuth understands that “with escalating house values, saving for a down payment can feel like reaching for a target that keeps moving farther away.” And he is right. But if you find a way to save money that works for you and gets you into your dream home, that target can be something you hit with a bullseye. It just takes patience. Start a Side Hustle Jennifer Beeston, the Vice President of mortgage lending at Guaranteed Rate Mortgage, is also a financial vlogger, and she educates people on money and mortgage matters. Beeston advises this when saving for a house: "A great way for buyers to save for a home is by doing ‘side hustles.’ They stash all their ‘side hustle’ income for their down payment. A few potential side hustles are working for Uber part time, or signing up with Fiverr.com and charging for one of your skills. Local side hustle examples would be dog walking, part-time personal assistant for a busy family, meal delivery, etc. The amount of ways I have seen people make money with a few extra hours every week is astounding. If you have the will and any skill, you can make extra money." Beeston’s advice is similar to Hanamura’s in that you have to step outside of your comfort zone and take on extra jobs that may be stressful in the moment, but ultimately will make it easier for you to save money and buy the house you want. Whichever strategy you decide to go with as your money-saving method, our advice is to plan, stay committed, and don’t give up. You’ll hit that bullseye eventually, and we hope these tips get you a little closer to your target. Once you’re settled in your dream house, come back and check out the best home warranty companies so you can get the necessary protection for your home's systems and appliances.

It's easy to assume that most home warranty companies offer the same quality of services to be competitive in the industry. However, it comes down to the fine print in your contract and the company's history and reputation of delivering on its commitments. As you evaluate home warranties and home warranty companies, ask the following 10 questions: What does the home warranty cover? What are the exclusions and limitations? How does coverage compare to competitors? Has the company been sued for unethical business practices? What customer support does the company offer? How does the pricing compare to competitors? What do customer reviews say about the company? How long is the contract? What's the cancellation policy? What's the renewal process? 1. What does the home warranty cover? The first thing you need to understand is the coverage offered by the home warranty provider. You'll often find similarities in covered appliances and systems across companies, like heating and air conditioning systems, refrigerators, dishwashers, and more. Most home warranty providers also offer add-on coverage options like pool or spa coverage so clients can customize their plans to meet their needs. However, you'll want to review the coverage terms to understand what you're getting. To fully understand the coverage, you'll need to review a sample contract at minimum. Most home warranty companies only cover specific circumstances and certain parts or components. Some companies will offer additional service alongside their home warranty plans. These additional services can include annual tune-ups for heating and air conditioning systems or some pest control services. 2. What are the exclusions and limitations? Exclusions and limitations are included in most home warranty contracts. Specifics vary by company, so it's important to review yours before you make a purchase. Common exclusions include Pre-existing conditions Poor maintenance Certain parts and components Some companies offer coverage for unknowable pre-existing conditions or allow you to add coverage for pre-existing conditions at an additional cost. You should also note what the contract says about the company's obligations when it comes to replacing parts or appliances. Most companies focus on matching efficiency, so they won't match size, brand, or color. Look for information about a waiting period, too. Home warranty companies often have a 30-day waiting period before your coverage starts. Some home warranty companies may waive the waiting period if you can demonstrate consistent, prior coverage. 3. How does coverage compare to competitor offerings? As you look at companies, consider what kind of coverage you want. Some home warranty companies offer an appliance-only, a systems-only, or a full coverage plan.  Other home warranty companies offer tiered plans that offer coverage for both home systems and appliances, though the number of included items varies. Some home warranty companies offer additional services, like pest control with their plans. Most home warranty plans are customizable, which means you can add coverage for more things to your plan. Pool or spa coverage is a common option. 4. Has the company been sued for unethical business practices? Some home warranty companies become involved in legal disputes as a result of bad business practice. While you can ask company representatives about current or past lawsuits, you'll have better luck if you do the research yourself. Consider any lawsuit involving the company carefully. If you see a large number of similar lawsuits, that's a definite red flag. 5. What customer support does the company offer? The most important aspect of customer support to review is the company's claims process. The cost-savings and ability to file claims is what you're paying for, so you need to know that the home warranty company will be there for you when you need it. Most home warranty companies have the same essential claims processes: You file a claim online or over the phone. The company responds to your claim within a certain timeframe, typically within one to two business days. There are usually expedited responses for emergency circumstances, as defined by the company. If your claim is accepted, you'll be assigned a contractor from the company's network who will then contact you to schedule an appointment. Coverage levels and timelines for replacements or larger repairs vary. For more details on these, you'll need to talk to a company representative and read customer reviews to understand more about the claims process, timing, and coverage levels. 6. How does the pricing compare to competitors? Sometimes, companies provide you more value at a slightly higher price than if you go with the cheapest option. Try not to default to the cheapest option without first comparing the prices with the options of other home warranty plans. Typical monthly prices vary depending on what home systems and appliances are covered by your plan. For plans that only cover appliances, prices can range between $230 and $600 annually, though it will vary depending on your home size and coverage specifics. Plans that cover only systems, generally fall between $240 and $720. Again, these vary depending on your home size and the contract's specific coverage. Some of the cheaper plans may not cover as many things as the more expensive ones do. If your plan combines coverage for systems and appliances, rates can fall between $375 and $1,500 depending on your plan's specific coverage and the size of your home. Some home warranty companies offer tiered plans that offer coverage for a different number of systems and appliances, so some of these plans are on the cheaper end. More comprehensive plans will be more expensive. Service fees typically range between $60 and $125 per visit, with most companies charging around $75 per visit. Some companies allow you to choose your service fee, though this typically affects your contract fee. The lower your service fee, the higher your contract fee and vice versa. Note the differences in the contract fees with each service fee amount. If there are huge differences, you may want to choose another company. 7. What do customer reviews say about the company? No company is perfect. You need to find out what customers are saying about each company — this should be your number one resource for choosing a company. Try reading as many home warranty reviews as possible. Think of your search for home warranty coverage as an interview. Make each company sell their service to you. You need to make them work for it. Companies that admit deficiency are more likely to be honest than ones who claim to be the best in every aspect of their business; every company has a flaw. The trick is to find which one suits you best. 8. How long is the contract? You need to understand the length of the contract you're buying. Most sample contracts last 12 months. Sometimes this 12 months includes a 30-day waiting period, which means you'll have 11 months of coverage. Some companies address this concern by offering 13-month contracts at the same rate, so you don't have to pay for the waiting period. You can also find companies that offer contracts as long as five years at lower monthly or annual rates. This contract length is nice if you're getting the service you need. However, if you need to get out of the contract, a longer contract can be trickier to manage. However long your contract, you need to understand how long you'll be paying a contract fee to ensure that it fits your budget. 9. What's the cancellation policy? Even though you probably don't plan to cancel a subscription when you buy it, it's smart to understand the process and terms of cancellation. Most home warranty companies offer a full refund if you cancel within the first 30 days and have not made a claim. Generally speaking, you'll receive a prorated refund of your contract fees if you cancel after 30 days or have made a claim. Home warranty companies will subtract the costs of services rendered and a cancellation fee from your refund.  In some cases, this process means that you'll need to pay the home warranty company to cancel. Other home warranty companies just take the lesser of the combined cancellation fee and services rendered or the rest of the contract fee for the term. 10. What's the renewal process? Along with understanding how cancellation works, note whether or not your home warranty plan automatically renews. Many home warranty companies will automatically renew your contract at their option. You should receive notice of any new terms and rates before the plan renews. If you don't want to renew, you need to understand the process for opting out. These processes vary by company. You may need to give the company a certain amount of advance notice or provide written notice of your plan not to renew.

It’s no secret home warranties do not have a good reputation. However, that reputation does not change the fact that there are reliable, reputable home warranty companies out there; you just have to know what to look for. Not all companies are attempting home warranty scams. There are many details to take into consideration before deciding if a home warranty company is worthy of your business, but don’t worry; we’ve created a comprehensive guide for you to follow and help you find the right home warranty company for you, all the while avoiding the scams. Look for top-rated home warranty companies in your area Before you spend a great deal of time researching home warranty companies, you want to make sure they 1) service your area 2) are top-rated in the home warranty industry. You don't want to waste your time researching a company that doesn't service your area and/or is low-rated with an overwhelming amount of bad reviews. How do I find top-rated home warranty companies? Go to a trusted consumer review site like BestCompany.com and see which home warranty companies in your area have the best rankings. Best Company makes it simple by having state filtering already set up without you having to do anything. When you visit the home warranty page, BestCompany’s website will automatically know from your browser where you are located and will immediately filter the top home warranty companies to reflect ones that are near you. Or, if you want a list of home warranty companies in a different state, you can filter it manually. You can also choose if you want the results filtered by Top Ranked companies or by a company's Star Rating. On BestCompany.com, we rank home warranty companies on a variety of different data points. User reviews make up 75% of the company's score, and company details, such as fees, contract length, and time in business make up 25% of their score. Here's the exact breakdown: 1. User Review Index Score (75% of Overall Score): Star Rating of Reviews (52.5%) – The average 1-5 star score of a company’s published consumer reviews. Number of Reviews (17.5%) – The total number of reviews that have been published about a company. Responsiveness to Reviews (5%) – A company’s responsiveness rate to its consumer’s reviews that have a star rating score of 3 or lower. 2. Market Index Score (25% of Overall Score): Recurring Fees (5%) – The affordability of any fee a company charges its customers on a recurring basis. One-Time Fees (5%) – The affordability of a company's up-front or onetime fees it charges its customers. Contract or Warranty Length (5%) – The length or term of the contract/warranty to which a company requires/offers its customers to consent upon purchase of the company's product and/or service. Brand Search Volume (2.5%) – The number of online search queries made by consumers that contain the company's brand name. Time in Business (2.5%) – The number of years that a company has provided its products and/or services to consumers.  Verification of Data (5%) – If the company has "claimed" its profile on Best Company.com and verified that the information regarding the company is factually accurate. As you can see, consumer reviews make up the majority of the score because we believe consumer satisfaction is the best way to determine a company's credibility. This is also one of the quickest way to see if a home warranty company is a scam or not.  Read through the company's consumer reviews Consumer reviews are the most important thing to look into when considering a company, especially a home warranty company. Because home warranty companies are known for scamming and being untrustworthy, you need to find companies that have positive reviews that verify the home warranty is not a scam.  Experienced Home Inspector, Michael Marlow, gives us this advice when looking into reviews: “Be forewarned that many people only write a review to complain, so when reading reviews, look for the story behind what is written. Most review complaints are from homeowners that were denied claims for uncovered issues, or from preexisting condition exclusions.” Try to gather the facts in reviews, rather than just focusing on the emotion intertwined in them. You also need to ensure the consumer reviews you are reading are legitimate. Many companies, regardless of the industry they’re in, will fake their consumer reviews to make it look like they are a good company when in reality, they really aren’t. To avoid this, only visit consumer review sites with verified reviews and unbiased data. Here at BestCompany, all reviews are verified to ensure authenticity and that they are not forged from the company itself. Look at a company's overall rating in the industry as well as their star rating from consumer reviews.  You can also compare a home warranty company against the top-ranked home warranty company on BestCompany. This will allow you to show the company highlights side by side and determine which business you are most interested in researching further. For example, this is TotalProtect compared side by side to our top-ranking company, Landmark Home Warranty. Research contracts in-depth before committing People are quick to label anything as a home warranty scam when it comes to tricky wording in contracts. You should be wary of companies that hide loopholes within their contracts. However, homeowners need to understand that home warranty plans can’t cover everything—this would quickly put any warranty company (not just home warranty companies) out of business. A common disappointment with home warranties is the “pre-existing condition” loophole that is laid out in the terms and conditions. Some companies tend to cover themselves in cases of large expenses by claiming that the appliance or system in question had a pre-existing condition—this defeats the purpose of home warranties. To avoid this, make it a point to ask potential home warranty providers in which specific cases the pre-existing condition applies. You should also be analyzing the terms and conditions for such loopholes. This is extremely tedious but will save you heartache and money in the end. Also, Identify and list the most vital home systems and appliances you would like covered in your home warranty plan. Use this list when you deal with home warranty companies and ask company representatives to show you where in the contract these items are discussed. This will allow you to understand exactly what the terms are in regards to each of those systems and appliances. Be extremely meticulous when it comes to reading the contract and talking to representatives so as not to miss a crucial detail. Check if any cases have been made against the home warranty company It’s important to look into a company’s legal history to see if any cases have been made against the company. Marlow explains that “All home warranty companies are supposed to register with the states they do business in. Normally this is with the department that regulates insurance, but it may be different in some states.”  Check if the home warranty is registered in your state and then go further by researching its legal history. Look for any lawsuits and other red flags that would indicate the home warranty company has a negative legal history.  Determine replacement times and quality of customer service Many bad quality home warranty companies delay repairs as long as possible to lengthen the process and save money. Even if you desperately need a replacement, they may only “repair” the system or appliance and then it’ll break again soon after. You want to make sure they don’t try to do everything they can to get out of replacing something, especially larger systems, such as an air conditioner. To avoid this common home warranty scam, check with past customers, either through word of mouth or through consumer reviews, and determine what the company’s reputation is for customer service and repair time. If it’s lengthy and the company doesn’t have a guaranteed response time, they could likely be a scam.  Look for available online claims With nearly everything being online nowadays, online claims may be something you need in a home warranty provider. Home warranty companies that have online claims guarantee a level of convenience because you don’t have to spend time talking to customer service and waiting in a long phone line. However, just because a company has an online claims process, that does not mean their response time is quick. Still make sure to check their repair time and their customer service reputation.  The better the claim process, the more likely the warranty company is not a scam. Pay attention to customer service hours In addition to having quality customer service, having customer service available 24/7 is also a sign of a quality home warranty company. 24/7 customer service also gives you peace of mind that you never have to be left without help, even if it’s 3:00 AM in the dead of Winter. Home warranty providers that are recognized and reputable companies often have customer service available at all times so as to always have people available to help customers. See if a company has quality contractors—or opt for a company that gives you the option to appoint your own A large part of a home warranty is the contractor that comes to your home to fix or replace any damaged systems or appliances. Whether or not it is a quality contractor will likely determine your satisfaction with your home warranty. Check consumer reviews and talk to home warranty companies about their contractors. Ensure they are quality servicemen. There are also home warranty companies that allow you to select your own contractors and the company will reimburse you for the charge. This is convenient for people who already have contractors they trust and want to do business with. If this is the case, look for companies that allow this.  Marlow says home warranty companies that allow homeowners to select their service contractors are the best to do business with. “One of the biggest complaints we hear is about the incompetent contractor that was sent by the warranty company or the long wait to get someone out. The best companies give you the option of picking your own contractor and being reimbursed for the covered expenses. This allows you to get your regular service provider out and have them out on your schedule.” Consider a company's time in business Although time in business isn’t the main determiner of whether or not a home warranty is a scam or not, it is definitely something to consider. If a home warranty company is fairly new and doesn’t have a large number of reviews and customer testimonials, you won’t know if you can trust that company or not. You also don’t know how experienced that company is in the home warranty business. They may have previous experience or they may not know much at all. Talk to your home warranty company about their history and check out their “About Us” page on their website. This will tell you a little bit about their experience will likely help you determine if you trust them with your business.  Determine if the company has customizable coverage—and if that’s something you’re interested in This isn’t always the case, but customizable coverage is typically a sign that a home warranty company is not a scam. It demonstrates to consumers that the company is flexible and is interested in best serving individual customers’ needs. Talk to home warranty providers and see if they have warranty plan options that work for you. If the company doesn’t cover what you need and they are not willing to budge to accommodate you, they’re likely not the company for you.  Beware of prices that are too good to be true This isn’t just advice for avoiding home warranty scams; It’s advice for avoiding all scams. Always be cautious when a company or individual tries to get you to “act fast” or offers you a price that is too good to be true. In many cases, a company will advertise cheap prices for their most basic home warranty plan that likely will not cover everything you would like it too. Purchasing without the proper research could leave you with a bill and a hefty long-term contract and the improper coverage for your systems and appliances.  Look through all home warranty packages to ensure you are selecting the one that works best for you. Also note, many home warranty companies upsell their premium packages. Only consider paying for extra protection if your circumstance meets two requirements: 1) you have costly home appliances or systems, and 2) you are absolutely certain that the company is not overselling its premium warranty plan. How much should a home warranty cost? This will vary based on your specific needs. The average home warranty cost ranges between $350 and $600. Basic coverage should be on the lower end and more extensive coverage should be on the higher end. The average trade service fee for a home warranty is between $50 and $100. Most often, home warranty companies will allow you to select a cheaper service fee if you pay a larger annual fee and vice versa. Make sure the home warranty company has a reasonable service fee and it’s a bonus if it’s flexible with a variety of warranty plans. What is the home warranty contract length? Most home warranty contracts last the duration of one year. If a home warranty company requires a great deal more than that, it could be possible it is a home warranty scam. You don’t want to be locked into a contract longer than 12 months in case something goes wrong or you don’t end up liking the company.  Is there a cancellation fee? Most home warranty companies don’t require you to pay a cancellation fee in the case that you terminate coverage. If a company notes an expensive cancellation fee, this is a sign of a home warranty scam. Make sure to research the cancellation terms and if it is legitimate or if the company is attempting to lock customers in a deceiving way. Is a home inspection required? Quite often, no home inspection is advertised as a positive for a home warranty company. However, this is how you would know if there was a pre-existing condition on any of your home’s systems and appliances. Without knowing, appliances and systems may not be covered if they are a certain age. A home warranty company could refuse to repair or replace it because it wasn’t properly documented beforehand. Consider getting a home inspection to avoid this difficulty. It will ensure more transparency within your policy and less likeliness that you’ll get scammed. Marlow goes further in depth of why a home inspection is important. You should look for a company that will cover the appliances that you have, regardless of age. You should also ask what their policy is on preexisting conditions. Some of the better companies will take your home inspection report and use that to determine if a system was operational at the time you purchased the house. This is what you should look for to avoid the company being able to duck paying out any claims. Don't skip regular system and appliance maintenance Having a home warranty doesn’t mean you can skip your home appliance and system maintenance. Not properly taking care of your appliances and systems could show misuse to your home warranty company and they could opt out of fixing or replacing such items. Make sure you regularly check all systems and appliances and do any necessary maintenance to ensure no lapse in your home warranty coverage. Real home warranty experiences Homeowner, Carol Gee, explains her experience with a home warranty and how to avoid the scams. When we purchased our first home 27 years ago (prior to that my military spouse and I had lived 17 of our 20 years in service in base housing), we bought this lovely older home. At the closing, the sellers gave us American Home Shield for 1 year. We didn't know what this was until they told us it was because the cooktop and other appliances, while in good condition, were old. After the first couple of years, we were determining whether we really needed this as it was kind of expensive. About a month before we were to renew it for the following year, I went into my laundry room and thought I needed a boat. The hot water heater had died. I immediately called the company and they told my husband how to cut off the water to it, then took down my info.  The next day a repairman came out, replaced it, and hauled the old one away. However, before writing a check to renew [the home warranty], I called several friends to see if they had a warranty and who with. Those who did had AHS. They had always had good things to say about them. I already knew the company had been in business since the early 70s which I liked. We had used them a couple times prior, so hurriedly I wrote my check to renew. In order to avoid [bad home warranty companies], I try to use services based off of references from folks I know. In turn, I happily refer good companies to those I know.  "A good company to me is one you can depend on to offer continued good service. Others who take your money and fail to provide the services they offer are scams." Experienced Home Inspector, Michael Marlow, has some last advice for us.  Look for a company that will cover the majority of the house systems without charging extra for every little thing that most houses have. Some of the common things to charge extra for are multiple HVAC systems, water heaters, or kitchen appliances, washer/dryer, underground sewer lines, Icemakers in the refrigerator, and termite treatments.  "Make sure that big-ticket items like roof leaks are covered in the basic policy." With 27 years of full-time experience as a real estate broker, Jerry Grodesky has some advice for anyone looking into home warranty coverage. In the past, the biggest problem with warranty companies was that they prorated problems based on age. Hence, one could have a leaking hot water heater the day after closing, and because it was 12 years old, the buyer would get $1.00 from the warranty. It made many people upset. While many warranties now have better ways to fix or replace problems, there still may be a cost like $70 to have a contractor inspect the problem first. "I would caution every [home] warranty buyer to fully review what is covered and the additional costs for adding areas of interest beyond the general warranty." Is a home warranty worth it? If you’ve budgeted really well to cover home emergencies and improvements, a home warranty may not be necessary for you. However, if you haven’t budgeted for extensive home emergencies, then a home warranty could save you money and you likely wouldn’t be asking yourself “is a home warranty worth it?” It would be clear in your money saved that it most certainly is. Also, if you have an older home, your appliances are likely older and will need more repairs and replacements. Paying the yearly cost and service fee is going to cost you a great deal less than having to pay full price for a repair or replacement.  Here is the average cost of replacement for common household appliances and systems. The data is from landmarkhw.com. As you can see, replacements are costly, and those numbers are based on the lower end of estimated replacement costs. To know how often they need to be replaced, here is the average lifespan of each of the above household systems and appliances. The data is from landmarkhw.com.   The majority of these household systems and appliances last nearly 10 years. However, unless you have a brand new home, most of them are likely aged and will need replacing soon enough. This is where a home warranty could save you ample amounts of money. The Bottom Line If you have a quality home warranty company you can count on, you can have peace of mind knowing the systems and appliances in your home are covered and you won’t have to be scrambling if something breaks or malfunctions at an inopportune time. Home warranties are there to ease the stress on you and your wallet.  No matter where you look, you will always encounter home warranty companies that will try to make money off of other people’s oversight and attempt to practice home warranty scams. Rest assured that there are many legitimate home warranty companies that are ready to help you when you’re in need and won’t take advantage of you.  You have the right and obligation to be irritatingly inquisitive when dealing with home warranty providers and now you know everything you need to ask and look for when researching companies. If you’re properly researching home warranty companies, home warranty plans, and asking the right questions, you’re sure to avoid home warranty scams and find the best home warranty company that fits your circumstances.