What Is a Home Warranty, and Is It Worth It?
Owning a home can be expensive. Appliances and other items break down regularly, and they usually aren’t cheap to fix. You can offset the cost by getting a warranty. Home warranty companies offer an assortment of service contracts for homeowners. If you purchase a contract, it will cover the cost of replacing or repairing specific items in your home.
Learn more about what a home warranty covers, and find out if it’s worth it. If you decide to buy one, you can compare prices and options and choose the best home warranty for your situation.
It might be wise to talk to your Realtor about the home warranty as well. They normally will have some experience with the warranty companies and may be able to offer assistance with a referral. When you go to closing, your title company will likely have a choice of companies that you may select from.
What Does a Home Warranty Cover?
The coverage depends on the plan you select. Some home warranty plans only cover appliances, such as refrigerators, dishwashers, and ovens. Others are designed to cover your home’s major systems, including heating and cooling, plumbing, and water heaters. You can also get a combination plan that covers both appliances and home systems. Plus, some companies offer add-on options if you want coverage for a swimming pool, spa, and more.
The items you choose to cover must be in good working condition to qualify for coverage. If they are, the plan will kick in and pay for repairs and replacements needed due to normal wear and tear.
Are Home Warranties Worth It? It Comes Down to Cost
Home warranties generally cost between $300-$1000 annually. You also have to pay a fee for service calls. That usually ranges from $60-$125 per call. If you need to replace one major item, the warranty will more than pay for itself.
For instance, it usually costs between $2,000-$4,000 to replace a water heater and between $3,000-$5,000 for a new heating system. Air conditioners cost an average of $5,000 to replace. It’s easy to see how the warranty will benefit you when you need to replace one of these major systems.
Your warranty can also come in handy if you need to replace an appliance. Take a refrigerator, for instance. You can expect to spend more than $1,000 to replace a refrigerator, so you’ll come out ahead if you have a warranty.
Who Doesn’t Need a Home Warranty?
Most homeowners can benefit from a home warranty. It offers peace of mind and financial protection if something major happens. However, if you just purchased a newly built home, you likely don’t need a warranty right now. Builders usually provide warranties with new construction. These warranties often cover the HVAC system, electrical, plumbing, and more, and the contract might last up to 10 years.
Also, if you have a newly built home, you probably filled it with new appliances. Your appliances should also be covered under the manufacturer’s warranty.
If you were to purchase a home warranty, you would have a coverage overlap. That means you’d end up paying for coverage you don’t need.
Keep an eye on what your builder’s and manufacturers’ warranties cover and when they expire. When the contracts expire, you can then get a home warranty to get protection again.
Choosing a Home Warranty
Purchasing a home warranty makes good financial sense for most homeowners. Look at the details and compare plans before you buy a home warranty. Make sure it includes the coverage you need, and go over the coverage caps and requirements. After you find a plan that you’re pleased with, you can purchase it and start benefiting from the coverage. Then, you can relax, knowing that you have the coverage you need in case anything happens. That’s much better than having to maintain a savings account to handle unexpected repairs or replacements.
Richard Woodward
NMLS 217454
Your Local, Direct, 5 Star Rated Mortgage Lender, Specialty Lending Manager
Office: (214) 945-1066
Service First Mortgage NMLS 166487
6800 Weiskopf Ave #200, McKinney, TX 75070
Licensed by the Texas Department of Savings and Mortgage Lending (SML) Mortgage Banker Registration, AZ 0924237, CO, FL MLD1342, KY MC358087, OH SM.501988.000, OK ML01483. Service First Mortgage is an Equal Housing Lender. This is not an offer of credit or commitment to lend. Loans are subject to buyer and property qualification. Rates and fees are subject to change without notice.
Comments(2)