When you are buying a home, your real estate agent will likely offer you a home warranty to purchase. As you are making so many decisions to go along with buying a house, you may not really understand what you are purchasing or not purchasing.
What is a home warranty and how does it work?
Think of a home warranty as insurance on the working parts of your home. Like insurance, everything isn’t covered but many things are and each home warranty will detail the items that are and are not covered. Suppose your air conditioner stops working. What would you normally do? Without a warranty, you would try to find someone to come look at it and make repairs and hope they know what they are doing. With a home warranty, you call the home warranty company and they will send a professional that has previously proven to be a reputable contractor. You will pay a small service fee according to your warranty and the warranty company will cover the rest. If the item can be repaired, that is covered and if it has to be replaced, that is covered too. In the end, you pay a lot less for the repair. Before purchasing a home warranty, it is a good idea to review the terms so you understand what is and is not covered.
How much will a home warranty cost?
The cost of a warranty will normally run between $300-$500 depending on the size of your home though with really large homes and some add on options, the cost could be slightly more. The fee covers your property for one year. In addition to the upfront cost of the home warranty, you will also pay a service fee each time you use the warranty. Service fees typically range from $50-$100.
Think of a home warranty like health insurance for your home. You pay something up front for the peace of mind of knowing things will be covered if something breaks and then lesser amounts when you need something. Like health insurance, all items aren’t covered under a home warranty so it won’t cover everything that goes wrong but it will cover some of the larger items.
What a home warranty is not?
A home warranty is not to cover routine maintenance items such as a new roof, new carpet or new light fixtures. It also will not cover something that is damaged in a storm, fire or other catastrophe. Your homeowners’ insurance policy would cover that.
If you aren’t sure where to purchase a home warranty, you can find many options online or ask us for a recommendation. Even though you may not be buying a home right now, you can still purchase a home warranty anytime you choose. Home warranties are renewable each year if you want to continue the coverage. While some years, you may not use it at all. If you have something break, you will be thankful for coverage to cover some of your repair costs. Think about the last home repair you had to make and the cost of it. If nothing else, a warranty will allow you to budget your costs so you have fewer unexpected financial surprises when it comes to taking care of your home.
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