Protecting Your Investment With a Home Warranty

Prices vary drastically from state to state and from urban areas to rural areas, but the median value of a house in the United States is a little over $226,800. Owning a house is by far the biggest investment most people will make in their life, but it's not just they are buying that people want to protect, but the elements that make a house livable.

For example, take someone who owns a house in Austin, Texas. Austin is a lovely, livable urban area, but 2018 alone, residents experienced over 52 days (or nearly 1/6th of the year) when temperatures exceeded 100 degrees and dozens of 90 plus degrees. So no matter how great or humble your house may be, if the central air conditioner is on the fritz, it's like living in an oven.

Across the country, in Minneapolis, people have the opposite problem. The number of zero or even minus zero days approaches 50 or more days each year. So having a workable heater is critical to comfortable living.

Homeowners often do not pre-plan for emergencies 

Homeowners are very cautious about buying homeowners insurance and flood insurance but frequently are like the proverbial ostrich with its head buried in the sand when it comes to protecting their appliances, such as washers, dryers, and refrigerators, or their heating and air conditioning systems as well as their water heater and plumbing lines.

Such homeowners don't often realize that a new air conditioner or new furnace can cost as much as $500 to repair and several thousand to replace. That's why many savvy homeowners have both a home appliance, a major system or a combination protection plan on their house.

An example of a company offering such warranties is TotalProtect.com, one of the largest household protection companies in the U.S. They offer the TotalProtect Home Warranty. Monthly plans vary, of course, depending on where you live, but with plans ranging from as low as $32 to combination plans in the neighborhood of $55 a month, a single air conditioning or heating call alone may pay for the cost of a premium.

Nicholas Marr, a writer for homesgofast.com, touched on the need to plan in his article when he described the frustration of being a homeowner and being hit with an unexpected financial bill for a washing machine of $100 or more.

Marr's advice was to do your best to save four or five dollars a day for emergencies, which is good advice, but when you realize the same amount would practically protect your whole house with a premium protection plan, the latter is really a no-brainer.

How much should you budget on home maintenance 

An Internet budgeting site, the balance.com, has an insightful article to answer this question at How Much Should You Budget for Home Maintenance. The answer, of course, varies with your home's age and environmental factors, but The Balance suggests at a minimum, $1 per square feet of your house.

So if you have a 2,000-foot square home, plan on spending at a minimum, $2,000 per year.

Naturally, this figure includes things like repainting your house periodically and repairing fences around your house, but the older your home gets, the more it is subject to costly repairs or replacements such as water heaters, air conditioning, and furnace repairs.

Essential home items can be costly to replace. 

A typical air conditioning bill can cost $500, but if you need to replace an air conditioner, the bill can skyrocket to around $4,000. New furnaces are typically the same, or even higher.

A new hot water heater will set you back at least $1,000, a new refrigerator around $1500 or so, and on and on it goes. So the nice thing about having a home warranty is that you not only save money on repairs but if one of the major items in your house is now deemed unrepairable under your home warranty contract, you can get it replaced, minus a small deductible.

Home warranty contracts are therefore a smart idea and will easily fit into your expected maintenance budget.