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The past year has made everyone reconsider where they “live”.
The pandemic has accelerated the need for more space indoors and an increased desire for...
Are home warranties worth it for new homeowners?
You’re going to love this answer – it depends.
Don’t worry, we’ll give you some factors to consider when deciding if a home warranty is really worth the cost.
What is a home warranty anyway?
9/10 homeowners get this confused so let’s cover the basics.
A home warranty is a service contract between you and a warranty company that provides repairs or replacements on major components like kitchen appliances, washer/dryer, furnace, AC unit, plumbing or electrical.
It is not the same as home insurance.
Home insurance covers fire, weather damage, property crime, water damage, etc.
What factors do I need to consider?
1. How old is the home?
This could mean appliances are more likely to need repair or replacement.
Keep in mind some warranty companies have “improper maintenance” clauses – meaning you might not be covered if the previous owner didn’t maintain the system properly. So read the fine print and ask the seller for documentation.
2. How handy are you?
Do you love trying to fix things yourself first? Do you love researching contractors and getting multiple quotes?
If you just want the job done, then a warranty might be for you. Warranty companies have pre-screened technicians that come out and repair or replace covered issues.
3. Do you like peace of mind?
Having a home warranty gives buyers peace of mind. Sometimes that is hard to put a price on. If you’re particularly worried about a dishwasher going out as soon as you move in, a warranty can help.
What do home warranties cost?
Plan for at least $600, possibly more. This varies based on:
- How much coverage you want
- Type of home (condo vs. single-family)
- How long you want coverage
You can pay this up-front, at closing or do monthly payments.
You will also pay a service fee when you need a contractor to come to your house. This ranges from $50-$150.
Bottom line
A home warranty comes in handy for some, and doesn’t get used for others.
Sometimes the seller will provide a warranty as a part of the resolution after the home inspection. You should have a say in where this is purchased from.
Make sure to read the fine print and know what is covered and what is not.
Also take the time to read up on the most reputable home warranty companies, so you’re not left disappointed when something isn’t covered or the work is sub-par.
