Understanding Home Warranties
You did it – you bought your first home! You made it through all the paperwork, you saved enough for that big down payment, and you finally settled in. Everything seems perfect until that dishwasher starts to leak all over the kitchen floor. Calling the landlord won’t work this time around. Welcome to the joys of owning a home!
Many first-time homeowners are not equipped to perform even small repairs, no matter when they happen. What’s the next best thing to a landlord for a new homeowner? A home warranty.
What is a home warranty?
Much like insurance or the extended warranty you buy for your computer or vehicle, a home warranty covers the costs of repairing or replacing almost any malfunctioning system in your home. Typically, the cost can be between $300 to $900 annually. Home warranties skip the multiple calls and inquiries to get repair estimates. Instead, the homeowner calls their home warranty provider or submits a ticket online. The warranty company would contact a local repair professional to either fix the problem or replace the malfunctioning appliance. The home warranty premium will cover the costs with a possibility of a co-pay being involved. Some cases exist in which coverage can be denied including lack of maintenance, improper installation, code violation, excessive wear and tear, pre-existing conditions, and the appliance or system in not included in the warranty.
Is a home warranty a good idea?
The answer depends on the home and the buyer. Home warranties are particularly great for first-time home buyers who are getting their first home. They’re used to calling the landlord whenever there’s a problem, and a home warranty company takes over that role. But home warranties aren’t limited to younger home buyers. Any owners of any age can purchase a home warranty at any time. Sellers will often offer a home warranty with the sale of their home to sweeten a potential deal. It is important, however, to ensure you completely understand what is and is not covered in the policy before deciding to buy.
The age and condition of the house itself will also help in deciding if a home warranty is necessary. If you chose to buy a newer home, many of the existing warranties may still be in place. If the home does not have a warranty, it may be fine since it is very likely that the appliances will be new as well. Older homes, on the other hand, have a higher chance of something going wrong, especially if a warranty is not in place. But if new appliances or updated systems were recently installed in an older home, you may not have issues after all.
A home warranty can provide peace of mind in the home buying process, especially if it is a buyer’s first home. Regardless, if a home buyer decides a home warranty is the right decision for them, it is vital that they take the time to fully understand their coverage.
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