Do I need a home warranty?
What IS that anyway?
Those are common questions when a home warranty comes up in the process of buying a home.
Note: A home warranty is a totally different animal than home insurance.
In a nutshell, a home warranty is a policy that covers the cost of repairing many of your home appliances if they break down. Basic coverage will be $300-600. A home warranty generally covers electrical systems, plumbing systems, heating and cooling systems, washer and dryer, and kitchen appliances.
While home insurance is normally required if you are getting a mortgage, a home warranty is completely optional. Home insurance covers the breakdown of the structure of the home, while a home warranty covers the breakdown of the appliances within the home. Because these items come and go within the lifespan of a home, your mortgage company doesn’t normally take appliances, water heaters, and HVAC systems into account when it comes to the overall valuation of a property.
Why do you need a home warranty?
Quite simply, you need it to cover the cost of any type of repairs to appliances, interior electrical, interior plumbing, HVAC and water heaters. If you don’t have a warranty, you’ll have to call a service provider, pay the service call fee, AND pay for all the repairs, which can add up quick. For example, if your water heater goes out on you, you could be looking at $600-1000 or more in repairs!
With a home warranty in place, you will only need to pay for the service call, normally around $75. Most warranties will allow you to use local service providers rather than specify who you must call for your repairs.
You can get a home warranty at any time, but the best deals are usually available when you purchase a home. Buyers will sometimes ask the seller to pay for the home warranty. Ask your Realtor about that as you make your offer.
According to Curtis Shelley with Home Warranty, Inc., new homeowners experience 1.6 service calls within the first year from the failure of their mechanical systems or appliances. A home warranty gives you peace of mind from the expensive repairs that might show up unexpectedly.
In summary, a home warranty covers the wear and tear gap that your home insurance does not cover.
For more info on home warranties, check out an interview with Curtis Shelley HERE.
Have other questions about buying or selling a home? Contact us at firstname.lastname@example.org