A lot of buyers ask about a home warranty, the major question being ‘what is it’ because many buyers think it is homeowner insurance. But home warranty is not a home insurance. It covers other aspects of your home. In this post we will walk through what a home warranty actually is, what it covers and why do you need one.

 

What is a Home Warranty?

 

Home warranties are one of those contracts that come with almost every single transaction. It is an annual contract that covers the repair or replacement of everything from your furnace, air conditioner, electrical plumbing, your washer, dryer, refrigerator and other kitchen appliances. In short, all those type of things in your home that can break.

 

Home warranties actually try and cover the gaps left out after a home insurance. Often when you move into a house you do not know what’s working and what’s not working. It is always good to have an inspection so that it gives you an idea of what’s there in the house and in what order.

 

 

What does a home warranty cover?

 

Home warranties ensure that if something in the house breaks, it can be covered for you.

 

For instance, if the furnace breaks, they pay a $60 service call for you to make sure it is not kicked in and wasn’t broken on purpose. The home warranty team comes to fix it and if they can’t fix it they replace it for you.

 

One thing that sets the home warranty apart is that if the items under the home warranty are working the day the deal closes they are fully covered. This essentially means if they break they will be fixed or if they can’t be fixed they will be replaced.

 

The nice thing about a home warranty is that you just spend the down payment money and the closing cost money. If something happens to your home’s major appliances like your furnace or AC or other kitchen appliances, you get coverage.

 

 

Why do you need one?

Many people don’t have the kind of money to replace such items in the house. This is where the home warranty pays a major role for you as a homeowner. You get coverage for the first year and can always renew your home warranty contract after that.

 

As a buyer you get the peace of mind of having a home warranty company have your back in case something goes out of order.

 

Sellers usually like to offer home warranty to the buyers because stuff does accidently break, sometimes even from manufacturer warranties. A seller won’t like to get contacted for a broken dishwasher, they’d rather want the buyer to contact the home warranty company.

 

The cost of repairing or replacing a major home appliance is usually far more than what you will pay for a home warranty package.  So, if you are into a deal for buying a new house make sure you get a decent home warranty company on board especially for the first year after purchase.