A Home Warranty is a Must-Have for First-Time Home Buyers

Buying a home is very expensive. Homebuyers must pay for various inspections and provide earnest money before the deal is even established. Then, they must pay the down payment and closing costs as well as the costs of meeting with a real estate lawyer. Homeowners insurance is another cost that is added to the bill. Those are just the out-of-pocket expenses to take possession of the home.

A Home Warranty is a Must-Have for First-Time Home Buyers

Next, the home buyers will have to pay for the costs to move into the home. These moving costs include the movers and any furniture or appliances that need to be purchased for the new home. They will also have to pay for the costs to turn on all utilities. This can leave new home buyers quite strapped for cash.

If something breaks down during the first few months after purchasing a home, the new homeowners may not be able to afford any kind of repairs, which can leave them in a difficult situation. That is where a home warranty can be a big help for those buying their first home.

What is a Home Warranty?

A home warranty can be a great benefit for first-time home buyers. A home warranty is a service contract for homeowners. It provides coverage for the home’s systems and appliances. This service contract helps to reduce the service costs when a home system or appliance breaks down.

Typically, with a home warranty, there is a set fee homeowner pay to have a technician come to the home when a system or appliance has an issue. The technician will determine if the covered item needs repaired or replaced. Either way, the remaining cost is covered by the home warranty. This can save homeowners a lot of money, especially when their budget is tight after purchasing a home.

What Does a Home Warranty Cover?

A home warranty can cover various things in a home, depending on the options chosen when the warranty is purchased. Typically, a home warranty can include home systems, basic kitchen appliances, or even additional appliances in the home. It can even be customized to cover various other features in the home.

The typical systems a home warranty covers include the heating and cooling systems as well as the plumbing and water heater. The system coverage also provides protection for the electrical panel and wiring. Basic appliance coverage offers protection for the oven, refrigerator, dishwasher, and built-in microwave.

Since no two homes are identical, a home warranty can be customized to meet the needs of each homeowner. Homeowners can add protection for additional refrigerators, wine coolers, and even their washer and dryer. There are also options to provide protection for pipe leaks, roof leaks, septic systems, well pumps, and water softeners.

Those who have a pool or spa in their home can add coverage for these items as well. The home warranty will provide coverage for the pumps, heating, and various other equipment aspects of the pool or spa. This can provide budget-friendly options when these items break down.

What is the Difference Between a Home Warranty and Homeowner’s Insurance?

Although they may seem similar, there are major differences between a home warranty and a homeowner’s insurance policy. Basically, these two can be broken down into the covered incidents. For example, homeowner’s insurance covers issues that are unexpected and a home warranty covers the expected.

Homeowner’s insurance typically covers the home, property, and the items inside when something unexpected occurs that damages these things. This includes fire, theft, or other events that cannot be predicted. Homeowner’s insurance will also cover various damages to the home due to unexpected storms and natural disasters.

A home warranty covers various systems and appliances in the home. Since all these things do eventually break down or need to be replaced due to normal wear and tear, these issues are expected, even if the exact time frame is unknown. This is where a home warranty provides coverage.

How Does the Home Warranty Work?

After purchasing a home warranty for a new home, the covered systems and appliances are protected when a breakdown occurs. If one of these items has an issue, there are simple steps that will get that problem taken care of easily.

When a system or appliance breaks down, the service agreement should be checked to ensure the item is covered. The next step is to contact the home warranty provider. They will usually provide a number or a website where service requests can be submitted at any time of the day or night.

The home warranty company will then dispatch one of their approved service providers to visit the home at a time that is convenient for the homeowner. When the service provider arrives at the home, they will collect the small service fee outlined in the service agreement.

The service provider will then inspect the covered item and determine if repairs or a replacement will be necessary. The service provider will then provide the repairs or replacement for the covered item. The home warranty provider will cover the remainder of the costs.

Is a Home Warranty Worth the Price?

The price of a home warranty can depend greatly on the type of coverage needed or wanted for the home. Typically, a home warranty can range from $400 to $600 for an entire year of coverage. If additional coverage options are needed, the cost can be a bit higher. However, these prices can be broken up over the year to make it easier on a homeowner’s budget.

For some first-time home buyers, this can seem like a lot of money. However, when they factor in the savings they will receive if something breaks down, the price can seem insignificant. For example, the average cost of replacing a furnace is around $5500. This can be more if using a gas furnace. If covered by a home warranty, the homeowner is only required to pay the small service fee.

Even repairs on appliances can be quite expensive. The average cost of refrigerator repair is between $200 and $330, and this cost could be far more if the problem is complicated or the refrigerator needs to be replaced. When the budget is tight after buying a home, this cost can be impossible. A home warranty can be a great benefit in these situations.