Life Style

Before you get a home warranty, there are questions you need to answer and see if you really need it?

beautiful cape cod house lit up at twilight
beautiful cape cod house lit up at twilight

So you bought a home in the recent past. Chances are high you received or bought a home warranty along with your new home. The problem is you may expect too much out of your warranty deal than it can actually give you.So the next question should be – do you need to purchase a home warranty cover? Here are some questions you need to answer to be sure.

What is a home warranty?

Many people seem to assume that home warranties work in the same way as an insurance policy, which brings a major misunderstanding. The correct explanation would be to think of them as contracts of service, like a one guard home warranty. For instance, a contract from a manufacturer that can cover any repairs for your phone in case it runs into any trouble, home warranties are similar to that – the company is agreeing to cover the cost of fixing or repairing your home, and in some cases, it covers even replacement of appliances in your home.

A basic plan costs between $350 to $500 per year, and even more in some instances; and it will cover basic house systems like plumbing, electrical wiring kitchen appliances, air conditioning, and exhaust fans. Some plans that are ‘enhanced’ will usually cost an additional $100 up to $300, and they can cover certain appliances such as a washer, septic systems, garage door opener, refrigerator, and even a pool. Here are some factors to consider.

Find out if you are already covered

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Sometimes, someone will give you a home warranty for free, so it is good to accept it. However, keep in mind you will still pay the service fee even if they pay the premiums, even though this service fee is small – usually $50 to $125 per year.

It is very important to know if your home is already covered, before going to seek a new warranty. A general rule to follow if you are buying a brand new home is the structural elements of the building have warranties lasting for a maximum of ten years (according to most state laws), and home systems as well as appliances have warranties of one year.

Note that if you are buying new appliances and furnishings, it is a good idea to use a credit card, which will extend the warranty of the product.

Determine if the warranty is good for you

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When you are shopping for a home, you may get interesting offers from sellers who are offering a cover lasting a full year. Sometimes, you will also get real estate agents giving their clients a home warranty as a sign of gratitude for buying a home. On the other hand, you may find certain homeowners choosing to go the route of putting aside savings that will cover home repairs, instead of relying on the warranty.

If you have not made your mind up on the issue, consider this – assess the ages of the item you want to cover, and compare it to the average life span. There is a comparison chart on the website of the National Association of Certified Home Inspectors to make comparison easier for you.

If your items are past or nearing their life span, then it is a good idea to consider a home warranty. However, they need to be in good working condition for them to qualify.

How much does it cost?

House project with model, pencil and rules
House project with model, pencil and rules

The usual instance is that you will pay a few hundred dollars annually, either in installments or upfront – depending on the warranty payment plan. The cost will be determined by several factors, including the type of building, and if you have an extended or basic plan.

Keep in mind that the age of the building will not determine the cost of the plan, unless the building is newly built – in that case, the cost will increase. In addition, the area the building covers does not determine the cost either, unless the building sits on more than 5,000 square feet. Guest houses are also not covered by basic policies as they are counted as separate structures.

What are some benefits of home warranties?

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Home warranties are your home protection against any repair bills that may come up and threaten to break your wallet, so they give you some piece of mind. Homeowners who do not have emergency funds can see them as useful tools to buffer against losses or expensive repairs. Warranties will also make sense for you if you want to avoid the hassle of tracking down a contractor when you are experiencing an issue, as well as if you have expensive appliances in your home.

Home warranty issues tend to come up when you are buying or selling a home. Therefore, they can give you some reassurance if you have doubts about the maintenance of a home or its components, whether the house is newer or older.

In the case of many home sellers, they can give the buyer a paid up warranty lasting for about a year, so that this will act as consumer protection against any defects that will arise after they complete the purchase. You just need to remember that home warranties do not mean the seller is exempt from telling you any issues in the home when you are buying it.

Cons of home warranties

No matter how good home warranties are, they still have certain imperfections. One of the major problems of home warranties is they do not cover items that lack proper maintenance or are not working properly. This is considered an inconclusive area and is the source of many disagreements between holders and warranty companies.

In addition, if you have set your sights on a used home, it may come with structural parts that are past the ten-year life span, and the previous owner failed to maintain them properly. You therefore cannot correct the problem, and cannot get any warranty as a result.

Final thoughts

Home warranties are good – however, they are not the best solution to any risk you will face as a homeowner. It is very essential you read the fine print carefully, and make sure you think about whether the investment is going to pay off.

About the author

Manmohan Yadav

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