When you buy a new house there are going to be a lot of expenses involved. In fact, when you buy an old house those bills are likely to be quite high. No matter what, there are going to be repairs that spring up on you, and maintenance is always needed at certain times. You may even have old appliances and other household items that will either break down or are too inefficient to continue to use.
This is when it is important to start looking into getting a home warranty. The best home warranty will end up saving you money in the long run even though you are adding another monthly expense. Not many homeowners understand how home warranties work, however. In this article, we will go over what you need to know so you can decide if one will work for you.
What does a home warranty do?
People often get homeowner’s insurance and home warranties confused. They seem to do the same thing but the reality is that they are quite different. Home insurance covers things like fires, theft, water damage, and other unexpected events. If it would affect the integrity of the home then it is likely under the purview of your homeowner’s insurance.
A home warranty is different from insurance in that it is an agreement with the homeowner and a warranty provider that a discount will be given when there is an inevitable problem with some of the home’s structure, or even appliances. For instance, if your HVAC system gives out during the time the warranty covers then you are eligible for a discount toward repairs or replacement of the equipment.
It is not required for a homeowner to have a warranty whereas insurance is usually a requirement when you have a mortgage with a bank.
Usually, when the home is purchased, the lender will ask if there is any interest in getting the warranty to give them peace of mind that they won’t have a major unexpected expense in the future.
Is a home warranty worth it?
There are several benefits to having a home warranty but they may not be a great idea for everybody. If you don’t have an emergency fund, for instance, then a warranty is usually a good idea. When buying a home that is not custom built there is almost always a problem that pops up and can cost quite a bit to fix. If you have had an inspection done and the inspector tells you that things look ok for now but not to expect them to last a long time then this is a sign that a warranty will probably work out in your favor.
What does a warranty cost?
There are a lot of variables that affect the cost of a home warranty so it’s impossible to put a fixed number on it. It is usually in the range of a few hundred dollars payable at the beginning of the year. It all depends on the coverage and other factors, however.
Thank you for reading.