Can a Home Warranty Offer Peace of Mind?: A Homeowner's Guide to Success

A home warranty is a type of service that covers the cost of maintaining major household items and systems such as washers, dryers, stoves, water heating systems, plumbing, electric wiring, and more. 

When you have a home, you’ll have the option to get one. It can help alleviate your worries of dealing with a broken household appliance that will cost a lot of money to repair or replace. The best time to purchase a home warranty is when you move into your new home. Moving houses can be stressful and costly. You don’t want the added expense of paying for a hefty bill to repair a broken appliance. 

For example, the average cost of repairing a refrigerator can go between $200 to $400. Many households are not financially equipped to cover that unexpected expense. This is where a home warranty comes very useful. The home warranty company also does all the work in finding a service provider to come to your home. This is a huge benefit especially when you’re still trying to adjust to your new neighborhood.

Most home warranty plans only require you to pay between $300 to $600 per year, and you’ll have the option to pay monthly or annually. That’s almost the same amount you would pay to fix a single appliance. After a year, the homeowner is given the option to keep the policy, but rates will usually be higher. This is because appliances age which makes them more vulnerable to damage.  

Factor in the costs of owning a home

This is a big one. Most people don't know just how much it takes to actually buy a home. The sale price isn't all you have to contend with at all. There is so much more to the process than the down payment and the monthly mortgage payments. 

While it's true that every purchase is unique, there are some common additional costs involved in the home buying process that will need to come out of your pocket and these can often sabotage your plans to own that beautiful family home that just came into the market. Some of the additional expenses involved include:  

• Closing costs

• Immediate repairs

• Home inspection costs

• Insurance costs and taxes (some neighborhoods have their own additional taxes and charges for homeowners)

• Initial homeowners’ association fees

• Moving charges 

The best way to avoid this mistake is to ask your realtor to give you a complete breakdown of the costs involved in purchasing the house you have in mind. You should also make it a point to meet with the head of the homeowners’ association for the new location so they can tell what kind of financial obligations come with living in that neighborhood. 

A home inspection might sound like just another excuse to spend more money that you don't have but a home inspection is one of the most important steps in buying a home. You don't know what kind of state the old owners left the home in before they moved out.   

• Is the electrical wiring up to code?

• Are the appliances functional?

• Are the fixtures, mostly electrical, energy saving?

• What about the water pipes, drainage and bathrooms? Will these need an overhaul?

These are all the things you need to find out before buying a home that will prove to be a money pit. Even if it's a brand new construction home, you still need the inspection to give you peace of mind.  

Home Warranty vs Home Insurance

Take note that home warranty and home insurance are totally different services. Home insurance covers your home’s structure in the event of a fire, flood, storm, or other calamities. Meanwhile, a home warranty covers repairs and replacements for home systems. Here is a comprehensive list of appliances and systems that can be included in your home warranty coverage:

• Dishwasher

• Stove

• Oven

• Refrigerator

• Microwave

• Garbage disposal

• Trash compactor

• Washer

• Dryer

• Air conditioning

• Central vacuum system

• Heating

• Pools

• Spas

• Whirlpool bath motor and pump

• Plumbing

• Interior electrical

• Interior telephone wiring

• Ceiling fans

• Doorbells

• Pest control

• Garage door opener

• Heat pump

• Attic and exhaust fans

• Instant hot water dispenser

The cost will depend on how much you want to be covered. If you live in a large home that uses a lot of appliances, it makes sense to get a more expensive home warranty that provides more coverage. Some plans will also allow you to customize your coverage, covering particular systems that are unique to your home. 

One of the biggest investments you will make is buying a home. To purchase home insurance is not only to secure a home loan, but it is also the best way to give yourself peace of mind. It will safeguard you against any unforeseen loss or damages to property,  such as storms, falling trees, cyclones, flood or fire, etc, Instead of paying out of your own pocket, you claim for the damages and only pay the excess. 

Different Insurance service providers offer different options or benefits.  It is best to research the benefits of various service providers and choose what best suits your needs. Many insurance policies cover more than damage to the property. Policies may also cover personal belongings, your liabilities, and even family members. It is important to regularly check to make sure your policy is up to date.  

How does a home warranty work?

Let’s say that one of your appliances breaks down. Your dryer doesn’t work anymore. You’ll need to call the home warranty company and they will first check whether the appliance is covered by your plan. If it is, they will then set up an appointment with a licensed service provider to visit your home.

The technician will assess the damage and check whether the work it takes to fix the appliance is covered by your warranty. They might tell you it is or that you need to pay the additional cost of buying a new part. Again, this all depends on your coverage. After the inspection, you pay the service call fee and the rest is paid for by the home warranty company. 

If you plan to sell your home, you can also get some peace of mind knowing that your home will sell fast. This is because buyers like the assurance that a home warranty can protect appliances when they move in. Some home warranty companies even provide full coverage for the seller while the house is listed in the hopes that the buyer will continue the coverage. Yes, home warranties are also transferable to the buyers. 

Are Home Warranties Worth It?

There have been reports that sometimes, home warranties aren’t the best option for some homes. There have been claims that very bad home warranty companies will not provide any services to protect your appliances that have not been properly maintained over time. Even though the claim could be valid, a homeowner could be denied. However, this is an unusual accident that could potentially happen in your home. 

However, there are also instances where it’s completely out of the homeowner’s control. For instance, if a person moves into a home that has a 10-year old furnace and it wasn’t properly  maintained, then this homeowner might not even get covered by the home warranty company. A good home warranty company will help you cover the cost of getting a new furnace and then help you with maintaining it over the time you live in that home. 

The benefit of this home warranty system is that it can be a buffer between the homeowner and the contractor at expensive costs. What a home warranty does guarantee is to help the customer as much as it can in covering replacement and repair costs, getting you a contractor, and maintaining those appliances in your home. If you don’t like the contractor that does the work, this could be a pesky situation. However, the home warranty company can help you find a new one. 

Also, if you’re not a handy person or don’t know handy people, this can really help mitigate the costs of fixing and maintaining appliances in your home. A typical furnace repair without a home warranty can go as high as $500, whereas with a warranty, the maximum could be around $100. If you don’t have the savings after purchasing a home to invest in any new appliances, then a home warranty could be your best option. The upfront cost of a warranty could be potentially up to $400 a year, but it covers you for repairs, replacements, and contractor issues alike. 

In the long-term, for those homeowners that have just gotten their new home, a home warranty would be a good fit for those that aren’t equipped to pay the cost of expensive replacements like new home systems or appliances. The maintenance of it will also make your house a better fit to sell in the future and make sure while you’re there that minimal damage happens. 

There are a lot of benefits of getting a home warranty and if it fits your needs, it can be a great investment for your home.  

Other Helpful Home Warranty and Insurance Tips

Whether you are a new buyer, have 1-2 under your belt, or consider yourself an experience buyer, it is always a good idea to understand the important of and peace of mind a home warranty can provide. For more details on the importance of home warranties this is the perfect read for you.

There are so many things to take into account when home buying that it is easy to overlook what a home warranty entails and whether or not it makes sense to get one. If in doubt, this article should help convince you that not only are they a smart move but also explain why you need a home warranty in the first place. 

Get a Home Warranty and have Peace of Mind