What Is a Home Warranty and Do You Need One for Your New Home?

Saving for a downpayment isn’t the only saving you should do

A home warranty is a coverage for the operating components of your home.  Things like the refrigerator, heater, and air condition are some of the items that are usually covered.

Owning a home is a great achievement.  At the same time, it comes with responsibilities and costs. As a homeowner, you are now responsible for repairs and regular maintenance on your new home.  A home warranty can give you some comfort that you’ll be covered when something breaks.

However, many first-time homeowners are not always financially prepared for some of the issues they may run into. For example, you could wake up one morning to find out that your water heater is leaking.  Everything in your house has a life cycle so it’s good to be financially prepared for when things need fixing or even replacing.

 

What do you do when things break?

Many homeowners may not have the time or experience necessary to do small repairs, especially when they come at unexpected times. Some individuals may be lucky enough to have a nearby family member who is knowledgeable in these sorts of incidences. Others may know an electrician or a plumber.  But the whole process of getting bids and figuring out what the real cause of the problem is, let alone getting it solved, takes a lot of time. The best thing to do as a new homeowner is to have a home warranty to help you.

What is a home warranty?

A home warranty works almost like an extended warranty or insurance policy you would buy for your flat-screen TV or smartphone. It covers the costs for replacing or repairing many things that may at some point cease functioning. Typically, payment plans range from $300 to $900 per year.

When you call for a repiar you’ll need to contact the home warranty provider and pay a deductible. Otherwise, your home warranty plan isn’t going to cover the repair. The home warranty company has agreements with repair people they’ve contracted with. The company will then send someone to solve the problem by either fixing it or replacing the malfunctioning item all together. The repair or replacement costs may be covered by your home warranty premium.  You’ll be required to make a co-payment for every incident.

 

 

Who should buy a home warranty?

Former renters are good candidates for home warranties because they may be used to calling the landlord when a problem or repair comes up.

Most of us work long hours and may not have the time or energy to call around and find an electrician or a plumber to get appropriate estimates.

A home warranty might help you with expected or unexpected repairs when they would otherwise be too costly.  You can avoid having to deal with this process on your own by obtaining a home warranty.

 

You know the life expectancy and the condition of most of your home components if your home has been inspected. Generally, most appliances break down after around 15 or 20 years. and you don’t want to deal with several malfunctioning things at the same time.

Before you do purchase a home warranty, however, it is advisable to shop around and compare the various premiums & coverage plans valuable to make sure that you get a good deal. Remember that an older home will definitely need more coverage.

Investors who may not want to be doing repairs for their tenants should also consider home warranties. This should especially be considered by real estate investors who are not as experienced with the typical amount of upkeep a property will require. A warranty will also prove very useful if you don’t have a network of repair people available to help make the repairs. A home warranty will keep both you and your tenants satisfied and happy.

What does a home warranty cover?

Obviously, not everything is covered by your home warranty.  Different companies offer a variety of packages.  They may or may not include the refrigerator, washer or dryer.

A good thing to do is to keep your property inspection handy.  Don’t file it away and never look at it again. It’s a good resource for tracking future repairs that will be necessary.

If you’re going to need a roof in 10 years, get an idea of what the replacement will cost will be and start a special savings account and save money monthly just for that rainy day.