One way to cut the stress of buying — or owning — a home

For Americans, buying a home is the most stressful event in modern life, according to a recent survey, with one-third being reduced to tears.

That's why a home warranty makes sense for a lot of buyers. It's a peace-of-mind measure that guards against a disastrous unexpected repair or replacement cost. For home buyers and homeowners, it means one less thing to worry about.

A typical home service contract, often referred to as a home warranty, is paid for through a modest monthly fee or one planned sum upfront, and it requires only a small service fee for each repair visit; there are no giant repair bills to worry about.

Just last year, the Federal Reserve System released a report that found four in 10 American adults would either borrow, sell something or not be able to pay at all if faced with a $400 emergency expense. Many home-system breakdowns could easily exceed that; so, for anyone who finds themselves among that 40%, the preplanned cost of a home warranty would make a lot of sense.

Of course, some people believe service contracts are not worth the money. Perhaps for them, that may be true. But others find them well worth the cost. Considerations include whether the contract makes budgeting and saving easier; whether the coverage provided in the plan makes sense for your home; and whether you have the discipline to save money for a rainy day.

Consumers can choose from a variety of options when buying a home warranty, including plans that cover only a few components, many components or an entire home. With dozens of providers, plans and a variety of payment options, a little research and preparation can help you find a plan that works best for your home.

Then, whenever you have a need, the home service contract company will send a repair professional out to help. Some suggest this can be a problem with home warranties; however, many consumers see it as a major benefit. There's no need to dread the hassle of finding a quality service professional — one who will come out on short notice and not charge an arm and a leg for a simple visit. Many service-contract providers keep active agreements with local and trusted repair people to ensure that the job is done right.

As executive director and general counsel for the Service Contract Industry Council, I can say with confidence that our folks work hard to make sure consumers are protected from bad players by pushing smart regulations of the extended-warranty industry. We know how helpful service contracts can be for consumers, and we don't want anyone to be confused about their value or tricked into buying a bad one.

To this end, we always recommend that consumers read the small print and check their state Department of Insurance website before buying. There, you should look to find a service-contract administrator's provider history and ensure that the provider is licensed, registered and solvent.

If you are not sure you need a home-service contract, know that you are not locked in forever when you buy. Many states, including Minnesota, offer a free-look period so consumers can try it out before committing. Minnesota's free-look period is at least 10 days, according to state law, and provides the consumer a full refund of their money if they change their mind.

The bottom line: Buying — and even owning — a home can be stressful. That's why a home warranty is a smart choice for many consumers. It can protect your house, your wallet and your peace of mind.

Tim Meenan is the executive director and general counsel of the Service Contract Industry Council and has worked on regulatory and legislative matters affecting the extended warranty industry in Minnesota and nationally. Learn more at go-scic.com.