Purchasing a new home is an exciting time and a huge responsibility. The landlord took care of repair bills or monthly maintenance costs before renting. Homeownership means those expenses now fall to you. For example, a home warranty plan might be a great idea if you don’t have substantial savings account to cover unexpected repair costs. Here are a few tips to understand what a home warranty is and how to purchase one.
1 The difference between home warranties and home-owner’s insurance
These two terms can be confusing, but warranties for a homeowner are easy to explain. A home warranty plan is a service contract with a company to cover repair and replacement costs of the home’s appliances or systems. Home owner’s insurance is what a mortgage company requires to carry a loan on the house and property. This insurance protects the homeowner from serious weather-related disasters that affect the house structure itself.
2 Unexpected repairs can be a headache
The age of the appliances and systems in the home will determine how often you will be spending money on repairs and eventual replacement costs. Check the year of manufacture of all the appliances. If they are roughly the same age, then the small monthly warranty fee could be well worth the cost versus tens of thousands of dollars to replace them all at once. It’s estimated that one in five brand new appliances will break down within the first four years of ownership. These types of expenses are not covered under the home owner’s insurance. And that’s IF regular and routine maintenance is conducted on these appliances to ensure maximum life.
3 When to purchase a home warranty
There’s a myth that home warranty plans can only be purchased when you sign the new mortgage papers or only on brand new homes. This is not true, however. A home warranty can be bought for any house at any time. Just know the appliances and systems need to be in good working order before the warranty is purchased. The contractor’s warranty often covers a brand new home for about one year.
4 What if my house is vintage?
It’s a good idea to get an inspection done on any home before purchasing. You are responsible for any maintenance or issues the previous homeowners did or didn’t do when they occupied the residence. But, even if you have a 100-year-old house if the appliances and systems are in good working order, then purchasing a home warranty should be no problem.
5 How to use the home warranty
After purchasing a home warranty plan, the company should provide a toll-free number to call for a service technician. Many warranty plans have service fees paid to the technician (much like a co-pay at the doctor). The service fee is paid out of your pocket to the service technician to diagnose the problem. These fees can range from $85 to $125. The warranty plan then pays the contractor directly for the repair or replacement costs of the appliance.
A home warranty plan is a great insurance to protect your new investment and offer some peace of mind which could save you loads of stress in the long run.