Home Warranty Explained for Homebuyers: What Every Homebuyer Should Know

Think of a home warranty like a protection plan for your home’s systems and appliances. It’s a service contract that helps pay for repairs or replacements when things break down from normal use.

Various home warranty companies offer different types of coverage, so it’s important to compare their plans and customer reviews.

Home insurance protects you from things like:

• Fire damage
• Storm damage
• Theft
• Accidents

A home warranty covers:

• Broken appliances
• Heating and cooling systems
• Plumbing problems
• Electrical issues

Basic Coverage Usually Includes:

• Kitchen appliances
• Washing machine and dryer
• Water heater
• Electrical system
• Plumbing system
• Heating system

Extra Coverage Can Add:

• Pool equipment
• Spa equipment
• Air conditioning
• Garage door opener
• Roof leaks
• Well pump

Home warranties don’t cover:

• Things that were broken before you bought the warranty
• Damage from not taking care of items
• Problems caused by storms
• Normal wear and tear that doesn’t break the item
• Cosmetic issues

When something breaks, you call the home warranty provider:

1. They send a repair person
2. You pay a small service fee (usually $75-$125)
3. The repair person fixes the problem
4. The home warranty provider pays for covered repairs

Most home warranties cost:

• Basic plans: $300-$600 per year
• Premium plans: $500-$800 per year
• Service fees: $75-$125 per visit

The home warranty cost can vary significantly based on factors like the type of property, coverage options, and any exclusions in the warranty.

While home warranties can provide financial protection and peace of mind for homeowners, they may not be the best option for everyone. Here are some alternatives to consider:

1. Self-Funded Emergency Fund: Instead of paying for a home warranty, homeowners can set aside a portion of their budget each month in an easily accessible savings account. This fund can be used to cover unexpected repairs and replacements, providing a sense of security and financial protection.
2. Manufacturer Warranties: Many major appliances and systems come with manufacturer warranties that cover repairs and replacements for a certain period. Homeowners can take advantage of these warranties to save money on repairs and replacements.
3. Homeowners Insurance: While homeowners insurance does not cover normal wear and tear, it can provide financial protection against damage caused by natural disasters, theft, and other unexpected events. Homeowners can review their insurance policy to ensure they have adequate coverage.
4. Service Contracts: Homeowners can purchase service contracts from manufacturers or third-party providers for specific appliances or systems. These contracts can provide coverage for repairs and replacements, often at a lower cost than a comprehensive home warranty.
5. DIY Repairs: For homeowners who are handy and comfortable with DIY repairs, they can save money by performing repairs and replacements themselves. This option requires some technical knowledge and skills but can be a cost-effective alternative to a home warranty.
6. Local Repair Services: Homeowners can also consider hiring local repair services to fix appliances and systems. This option provides more flexibility and control over the repair process and can be more cost-effective than a home warranty.

When considering alternatives to home warranties, homeowners should carefully evaluate their financial situation, risk tolerance, and repair needs. It’s essential to weigh the costs and benefits of each option and choose the one that best fits their lifestyle and budget.

1. Read the Fine Print: When considering a service contract or manufacturer warranty, read the fine print to understand what is covered and what is not.
2. Research Providers: Research local repair services and service contract providers to ensure they have a good reputation and provide quality work.
3. Check Reviews: Check reviews from the Better Business Bureau and other online sources to ensure the provider has a good track record.
4. Compare Costs: Compare the costs of different alternatives to ensure you’re getting the best value for your money.
5. Consult a Real Estate Agent: If you’re unsure about which alternative to choose, consult a real estate agent who can provide guidance and recommendations.

By considering these alternatives and tips, homeowners can make an informed decision about whether a home warranty is right for them and choose the best option for their financial protection and peace of mind.

Good Reasons to Get One:

• Your home has older appliances
• You’re a first-time buyer
• You don’t have savings for repairs
• You want peace of mind
• You’re not handy with repairs

Maybe Skip It If:

• Your home is brand new
• Your appliances are under manufacturer warranty
• You’re good at fixing things
• You have money saved for repairs

For Buyers

• • May receive warranty as part of home purchase
  • Coverage starts on closing day
  • Provides protection in an unfamiliar home
  • Peace of mind during first year
  • Can renew after first year if desired

For Sellers

• • Can cover home while it’s for sale
  • Makes home more attractive to buyers
  • Helps prevent repair issues during sale
  • Usually costs less than buyer coverage
  • Transfers to new owner at closing

During the Sale

• • Seller may offer warranty as selling point
  • Buyers can request warranty in offer
  • Cost can be part of closing negotiations
  • Coverage transfers smoothly at closing
  • No gap in protection between seller and buyer

Read the Contract Carefully

• Know what’s covered
• Understand the limits
• Check service fees
• Look at payment caps

Research the Company

• Check reviews
• Look at their service record
• Make sure they’re licensed
• See how long they’ve been in business
• Ensure the home warranty company uses trustworthy contractors and has reasonable coverage limits

Know Your Home’s Needs

• Age of appliances
• Condition of systems
• What repairs might be needed soon

We can:

• Explain warranty options
• Connect you with reliable warranty companies
• Help you understand coverage needs
• Guide you through the process

Consider:

• Age of your home
• Condition of appliances
• Your repair budget
• Peace of mind value
• Cost vs. potential savings

A home warranty can be a smart way to:

• Protect your budget
• Avoid surprise repair bills
• Keep your home running smoothly
• Have peace of mind

Let us help you understand how a home warranty fits into your homeownership journey. We can explain:

• Different warranty options
• Coverage choices
• Cost considerations
• How to get started

Ready to learn more? Contact DSLD Mortgage today for friendly, expert guidance on protecting your new home.

Note: Coverage and costs vary by company and location. Review specific plans carefully before purchasing.