Buying a home is probably the biggest purchase you will ever make. Because of this, those interested in buying a home must take many things into consideration. Price, mortgage, location and schools systems are a few factors that go into the decision of a homebuyer.
Unfortunately, this is only the tip of the iceberg. It is important to be informed about other things related to home ownership such as homeowner’s insurance and even a home warranty. This article will give you more information about home warranties.
1. What is a Home Warranty?
Although it is called a home warranty, in the United States it is more like a service contract. This agreement is made between the home purchaser and another entity, which could be the previous owner, the builder or the banker depending upon which home you choose.
This contract covers major repairs and replacements on major appliances, heating and cooling systems. The home warranty may also cover electrical and plumbing systems. Home warranties vary in coverage depending upon the entity offering the warranty.
2. Problems with Home Warranties
Home warranties are a great idea for many buyers but unfortunately, that is not the case for everyone. Some homeowners have encountered problems when trying to redeem their warranties. In some instances, a warranty company will choose to repair an appliance that really should be replaced due to its condition.
In other cases, warranty companies will deny claims stating the homeowner was negligent in their maintenance or that pre-existing issues are not covered. These sub-par warranties are often offered from shady businesses that frequently change their name to avoid paying on warranties. It is very important to check ratings of companies before you choose one to use.
3. Costs of Home Warranties
A home warranty plan costs around a few hundred dollars a year. It can be paid in a lump sum or in installments. In addition to the premium that you pay for your warranty, each time you make a service call, you are charged a service fee. This can range from 50 to 75 dollars. Many times if you have more than one repair, you will be charged a service fee for each repair instead of for each visit.
Home warranties are a positive investment for some people but for others, they are not cost effective. Having a home warranty does not mean that homeowners will never come out of their pocket for repairs but it does serve as a safety net for major system failures. Another benefit of having a home warranty is that you will not have to search for contractors to fix your problems. The warranty company handles this for you, which makes life a lot easier for the homeowner.