When you are in the process of finding and buying a new home, the last thing you are probably thinking about is a major repair bill. But just as with any large purchase, you want to feel secure and protected with your investment. A home buyer protection plan can give added peace of mind during that first year of new home ownership.
A home warranty is essentially a one-year residential services contract that covers repair or replacement of the components of your home’s most important operating systems and appliances if they fail due to normal wear and tear.
There are benefits to both buyer and seller. The seller has the assurance of knowing he or she is not going to be getting phone calls from angry buyers who have had to sink money into repairs and replacements of major systems in the home just sold.
As a buyer, your benefits are obvious: you can move in with peace of mind, knowing the cost of any possible major repairs with most of your home’s systems are covered.
Home buyer protection plans vary, but typically they operate by covering costs when certain repairs are needed for a home system or appliance. Typical items covered in a new home warranty are:
If a repair becomes necessary, either the covered home owner or the home warranty company representative contact one of the partnering service companies. The service provider then sets the appointment with the home owner to complete the necessary work.
Just as with any repair call, the service provider comes out and takes care of the problem. But unlike a typical repair call, the costs are covered by your home buyer protection plan.
Appliances that cannot be repaired, are usually eligible for replacement, which is also generally covered with your home buyer protection plan. You only cost for covered repairs or replacements will be a small service fee.
Because plans can vary, it’s a good idea to ask your real estate agent to help you review what is covered and what is not covered under your plan. You may want to purchase more extensive coverage, if it is offered.
Home buyer protection plans vary from one location to the next, and from one provider to the next. But there are certain items that end up on a list of exceptions to coverage more often than others, including:
You may also find that certain appliances are not included in your warranty, such as washer and dryer or garage door opener. Read your coverage carefully and consider adding coverage for any uncovered item you think could cause problems.
Also, keep in mind that payment can be denied for an appliance or system that would otherwise be covered, due to improper maintenance, faulty installation, unusual wear and tear, and code violations.
In some areas, it is commonplace for the seller to purchase the home buyer protection plan for the buyer. In others, the buyer is left on his or her own to find coverage. Your real estate agent and lender can serve as excellent resources for helping you find a protection plan that fits your needs.
The plans are typically economical to purchase, with price varying according to the cost of living and other financial parameters in your area.