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Next, find out if there are existing warranties on your appliances, and if there are, exactly what they cover. If you’ve been in your home for a while and have already had to replace appliances or home systems, check the paperwork to see the warranty details. Sometimes appliance warranties only cover defects, which means you would be responsible for the cost of repairing or replacing your items when they break down. If the problem requires more than one type of contractor to visit (e.g., a plumber and an electrician), the homeowner may have to pay the service fee for each. In most cases, home warranties will not cover a full replacement of a roof.
Your inspector went over everything with a fine-tooth comb before you bought your house. If you’re buying a home today, current mortgage rates are still very attractive. You can find the best deals by comparing several quotes — whether you’re shopping for mortgages or home warranties. As a buyer, you might want a two-year option, but be sure to ask about pricing. Better — negotiate with the home seller for 24 months of coverage if you can.
Should I extend my home warranty?
Homeowners insurance, also known as home insurance, is coverage that is required by all mortgage lenders for all borrowers. Unlike the requirement to buy PMI, the requirement to buy homeowners insurance is not related to the amount of the down payment that you make on your home. Fidelity Home Warranty’s standard plans cover home systems like plumbing and electrical systems, as well as appliances like your oven, dishwasher, and built-in microwave. Optional coverage options can add protection for the washing machine and dryer, roof leaks, pool and spa equipment, and some home modifications. While it may sound like a good idea in theory, extended warranties often come with a high price tag and don’t necessarily cover everything that could go wrong.
But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. A home warranty isn't necessary if you're purchasing a brand-new home. In most cases, the appliances will be under warranty from the manufacturer and your builder should warranty the home's major systems. You should find out what the builder's warranty includes before you decide to purchase one from an independent company. If your budget may be stretched thin by housing costs, you may also want a warranty so the cost of repairs is more predictable.
The Bottom Line — Are home warranties worth it?
Furthermore, the whole process may be more complicated when a third party is involved than if a homeowner is dealing directly with a contractor. Full BioPete Rathburn is a freelance writer, copy editor, and fact-checker with expertise in economics and personal finance. Home warranty companies determine whether to fix or replace a system. At 18 he ran away and saw the world with a backpack and a credit card, discovering that the true value of any point or mile is the experience it facilitates. He remains most at home on a tractor, but has learned that opportunity is where he finds it and discomfort is more interesting than complacency. Having a home warranty might even help you sell your home faster and for more money, if you ever decide to move, the contract can be transferred to the new buyer.
A home warranty is not a perfect solution to the risks and hidden costs homeowners face. If a seller wants to give you one, it won't hurt, certainly. Before you purchase one, though, read the fine print in the home warranty contract and carefully consider whether the warranty is likely to pay off. Typically, when purchasing a newly built home, the likelihood you’ll need a home warranty is slim due to the countless already provided warranties.
How soon can you use a home warranty after purchase?
A home warranty reassures a homebuyer and provides the seller with a measure of protection against complaints about home defects that arise after the sale closes. Whether or not your home warranty will cover repair labor will depend on your warranty’s coverage. Many will provide partial coverage of the labor with annual limits, but others may have predetermined deductibles that you must pay before coverage kicks in. When choosing a home warranty company, ask yourself what you really need.
Homeowners insurance protects you if your home or personal belongings are damaged or lost in a fire, lightning strike, windstorm, hailstorm or other similar event. It also covers vandalism and theft, and it has a liability component that covers accidents on your property and property damage to another person’s property. While a home warranty will cover the cost of some home repairs, the coverage plans are generally affordable. A home warranty will cost an average of $39 to $59 a month. Seriously consider a home warranty if you live in an older home, and if your appliances and systems are older or may soon be in need of repair. If you just purchased a new home and you aren’t familiar with the condition of the appliances and systems in the home, then a home warranty could make sense for you.
Do I need a home warranty?
When something goes wrong with a covered item, the home warranty company will arrange repairs. You may have to pay for a service call or part of the fees of the repair, though, depending on the terms. Note that although the broken appliance or system is covered under warranty, sometimes only certain types of replacement or repair will be covered.
Jeffrey L. Beal, president of Real Estate Solutions, has 40 years' experience in multiple phases of the real estate industry. “Expert verified” means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced.
New construction is often covered under a builder’s warranty for the first year or two, so purchasing a home protection plan would be redundant. Check with your contractor to see what’s covered and when to call. Most reputable builders are happy to fix any issues that come up as the house settles in its first year. Purchasing a home warranty can help alleviate some of the financial burden new homeowners face when a major appliance or home system goes out. Yes, you’ll pay for the warranty upfront, but the savings could be worth the added expense. Here’s an overview of what a home warranty is, how much it costs and whether it’s worth it.
The only way to know what a home warranty includes — and more importantly, excludes — is to read it before you buy it. Here are some tips on how to read your contract and avoid common home warranty issues. If you’re not protected elsewhere, it may be worth looking into a home warranty a little further.
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The contractor will diagnose the problem and determine if it’s a covered repair based on the warranty company’s guidelines. If it’s covered, they’ll proceed with the repairs and bill your warranty provider for the balance of the labor and parts. Some companies will also provide a workmanship guarantee for a specific time period. The contractor will inspect the faulty appliance or system and diagnose the problem.
When you have a home warranty, you can spend less on repairing and replacing appliances and more on things like fun garden gnomes or a DIY bathroom reno. What’s more, home warranties are worth it because they take worry out of the homeowner equation. They may not be high enough to cover major repairs or replacements. Home warranties shouldn’t be confused with homeowner’s insurance.
Most also won't cover walls, your home's foundation, or sprinkler systems. And remember, the homeowner has zero incentive to buy a great warranty and every reason to get the cheapest. But with some work on your end, you can find a home warranty that comes from a reputable company and truly has your back. Home warranties can protect you against unexpected expenses. Provide the agent with your contract details and customer information.
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