Moving is one of the most eventful experiences in life. It can be both exciting and stressful at the same time. There is much to think about and take care of when you purchase a home. It is a long-term investment and likely the most significant purchase you’ll ever make. You want to be sure you are doing everything you can to be prepared. Purchasing a home warranty by American Home Shield when you buy a home is a good way to protect yourself financially and avoid expensive repairs. If you are not sure how this plan works, make sure you learn everything you can so you’ll feel good about the decision to purchase one. It can give you peace of mind during a stressful time.
Not the Same as Insurance
To obtain a mortgage loan, you will need to purchase homeowner’s insurance. This requirement is worth the expense, as it can spare you stress and grief in the wake of an emergency. Insurance will cover damages and losses to your home and other elements of your property following a catastrophe or disaster, such as a fire, severe winds, hail, falling objects, and theft or vandalism. You pay an annual premium and select the coverage levels that make sense for your needs.
A home warranty plan has some similarities but also works differently than insurance. A warranty is not required to own a house. This is a voluntary purchase that you can make at any time during your ownership. You can even buy one for the home you are selling and offer it to the buyer.
A home warranty is an agreement you make with a company to provide repair and replacement services when something breaks down due to wear and tear. It also covers repairs of items that stop working suddenly and unexpectedly. Other than paying a service call fee when needed, when you have a home warranty, you will not have to pay any additional out-of-pocket costs to fix or replace covered items.
What a Home Warranty Covers
A home warranty is valid for many aspects of your home, including appliances and systems. When you purchase one, it can cover kitchen appliances such as a refrigerator, built-in microwave, dishwasher, garbage disposal, oven, and stove. It covers other appliances such as your washer and dryer, water heater, furnace, and air conditioner. It will take care of your entire HVAC system, plumbing system, and electrical system. You can even get protection for your sprinkling system, roof, and swimming pool, if you have one.
Duration, Costs, and When to Get One
A home warranty lasts for a year. At the end of this period, you can renew it and have coverage for another 12 months. These plans can range in cost, depending on the company that offers them. Most plans will cost around $500 a year, though some are a little less or a little more.
You can pay everything at once at the time of purchase or break down the costs into monthly payments. If you are purchasing a brand-new home, it will come with a one-year warranty. If you are buying an existing house, you can get a home warranty when you close on the transaction or anytime afterward.
The Benefits of a Home Warranty
A home warranty’s biggest advantage is that it can save you a significant amount of money on repairs or replacing an item in your house. Depending on the problem, some appliances and systems can cost hundreds, thousands, or even tens of thousands of dollars to fix or replace. If you don’t have savings built up or money available, this situation can present a hardship.
Having a home warranty allows you to take care of an issue without it severely affecting your finances. With this coverage, you can feel at ease knowing that when something inevitably breaks down, you won’t have to spend a lot of money to fix it or get a new one.
When It Might Not Make Sense to Get One
If you are buying a home, there are times when perhaps getting a warranty should wait. People who are handy and have skills and experience fixing home appliances and systems may prefer to take care of problems themselves. If you are in this category, you may not want to spend the money on a warranty. Also, if the home is only a couple of years old and all the appliances are still new, you may want to wait to purchase a warranty.
Evaluate the benefits of a home warranty and decide whether it is right for you to make this purchase. In many situations, this plan can provide the protection to your budget that you need.