Have you heard the term home warranty floating around? Typically this is thrown around as an option when you start to consider your inspection options or are concerned about the condition of important items in a home that you are thinking about purchasing.
To help clear the air, we thought we would take some time to discuss what exactly a home warranty is and if it’s something that might be a good investment for you!
What is a Home Warranty?
A home warranty provides you with financial protection from service providers for any unexpected repairs that you might need to make on appliances. When you purchase a home, it’s often difficult to have full confidence that everything is working as it should prior to living in the home. If you choose to completely waive a home inspection, this can also offer you some protection for those major systems if they turn out to need some repairs.
When you purchase a home warranty, you are purchasing this protection for however long you wish. Oftentimes, home buyers will purchase a one-year protection plan as most issues make themselves known within that time frame. Keep in mind that a home warranty is not the same thing as homeowners insurance. Homeowners insurance protects you in case of events such as fire, storm, flood, or other accident. Contrastly, a home warranty will cover the cost of repairs for home systems and appliances such as electrical, heating, plumbing, etc due to typical wear.
Typically, home warranties can cost anywhere from $300 to $600. Depending on the provider, you’ll have additional options you can add such as coverage for the roof or swimming pool. Additionally, the best deals can typically be acquired when you’re going through the buying process and are in the process of purchasing that home.
Benefits of A Home Warranty
Home warranties offer benefits for both buyers and sellers. For buyers, you can feel confident about moving into a home, knowing that you won’t need to spend additional money paying for surprise repairs after you move in. This warranty can give you peace of mind whether or not you’ve had an inspection done prior to purchasing the home.
If you’re looking to sell your home, a home warranty can also help protect the seller during the listing period. Additionally, sellers can offer to pay for the first year of this warranty to attract additional buyers to the listing.
Is a Home Warranty Worth It?
Whether or not you purchase a home warranty is completely up to your and your comfort levels. Typically, a warranty isn’t necessary with newer homes since those major mechanical items are relatively new and may still be under the manufacturers’ warranties. However, if the home is a bit older, the odds are something is going to break at some point and it may be beneficial to have that warranty protecting you. Additionally, be sure to read up on the different options offered by those different companies to find a plan that’s right for you that offers both the coverage you are looking for and is cost-effective. Keep in mind that, typically, these plans do require a deductible and may not cover pre-existing conditions.
Alternatively, you can dedicate what you would pay in premium payments into an emergency fund to use if any repairs arise. This will prevent you from running into a situation where expensive repairs may not be covered on your policy for one reason or another.
Ultimately, the choice is up to you. Read the policies closely, evaluate the coverage, examine your emergency funds, and always have some sort of insurance policy to repair those crucial issues whenever they arise, keeping in mind that any home will require maintenance at one point or another.
A home warranty is a great option to consider if you are concerned about any unexpected surprises when you purchase your home. If you’re not in the position to hand over a large amount of money to repair those major systems, then having this fallback can help. While there are many benefits, it’s important to read the fine print on the policies and really understand what you are getting before deciding if it’s the right option for you. Additionally, consider whether you’d rather put those premium payments into an emergency fund to fall back on instead of a warranty. In either case, know that these options are available to you to ensure that you feel confident in your new home purchase.