It can be frustrating to buy your dream home, move in, and realize that it needs repairs on major items. If you are staying in a rental home, you may call your property manager when the air conditioner (or something else) blows out. But when you own a home, it becomes your responsibility to get the repairs done. That’s where a home warranty plan comes in, to provide peace of mind to homeowners/buyers.
A home warranty is a service contract to protect you from unexpected repair or replacement costs of major home systems and appliances. It can help alleviate some of your financial burdens. With so many available options, it can be difficult to choose a home warranty as a first-time buyer.
Keep reading to find out the best home warranty companies for first time buyers, what they cover, how much they cost and more.
To make your life simpler, we have done the research and listed out the best home warranty companies. Take a look-
There are different types of warranties available in the market for new houses, such as:
Builder’s warranty: It is a warranty plan provided by the builder or developer for newly constructed homes. Most builders warranties cover workmanship for a year or two, but for major structural elements, the term duration may be 10 years.
Home warranty: It is a service contract for inexpensive repairs and replacements. It is one of the most common warranties that people purchase to add financial protection to their home systems and appliances. It typically lasts for a year but can be renewed at the end of the term. However, the contract can sometimes be monthly as well.
Homebuyer’s warranty: A home buyer’s warranty is generally provided by the sellers or realtors. It is a service contract for critical home systems and appliances that break down due to everyday wear and tear, aging, or mechanical malfunctions. These plans have to be purchased within 30 days of closing on a home.
OEM: The original equipment manufacturer warranty is provided by the manufacturers of any device or product. Once it ends, you can buy an extended warranty for the same product, often from the same manufacturer.
People often get confused with the thought of purchasing a home warranty. They don’t know when to buy one. We have listed a few instances where you can consider a home warranty plan for your home items.
When you want to save money
A home warranty helps you protect your budget by covering the costs of expensive repairs and replacements of your major home equipment. For instance, an HVAC replacement could cost you thousands of dollars. You can save the extra repair costs with a home warranty plan, since they generally cost an average of $30 per month in premium payments with a service call fee per visit. You don’t have to pay anything over this for covered repairs.
When you want to save time
Time is money, and you can save valuable time with a home warranty. If any of your covered items break down, you can call your service provider instead of frantically searching for help. Most companies provide 24/7 customer assistance. You just need to submit a service request and within some time the company will send a technician to your home. Some companies even offer services for emergency claims.
When you move into an older home
Repairs may be complicated, if you’re moving to a home with outdated systems and appliances. In such cases, you can purchase a home warranty to minimize repeated costs associated with often-malfunctioning household items.
When you don’t want additional liabilities
You can request the seller or real-estate agent to provide a home warranty to protect your home appliances and systems while you settle in your new home. Sellers may sometimes offer home warranty plans for free as an incentive to attract buyers.
A new buyer’s warranty plan covers the following major home systems and appliances:
However, depending upon the company and the plan you have selected, there can be more items offered as optional add-ons at an extra cost, such as:
The average cost for first-time buyer home warranties ranges from $300 to $600 annually. However, the total cost depends on the coverage desired, optional add-ons, area of residence, and the type of home you have. For instance, the cost for single-family and multi-family homes goes up to $600 and $2000 (annually), respectively. Along with the premiums, you are required to pay a service call fee whenever a technician visits your home for repairs. This fee ranges between $60 to $125.
Check out the table below to see the monthly costs of home warranty plans.
The issues in new homes are more common than you think. There may be defects in your new home that are not always readily detectable, and you may notice them after living in the house for a while. In such cases, there are some home warranty plans which you can consider buying. It covers failures due to unknown pre-existing conditions or due to improper installations, modifications, or repairs. Even if your newly constructed home passes the final inspection checks, the quality of items installed is not always guaranteed. As a countermeasure, you can purchase a home warranty that can protect you against such unforeseeable problems.
New homes generally come with a builder’s warranty. It covers permanent items like concrete floors, electrical work, or plumbing. If you purchase a pre-owned home, the previous owner may transfer the plan to you. A home warranty may be added if there are many aging home systems included in the sale.
To buy a home warranty, you can start by determining your coverage needs and do some research into plans that meet your requirements. After that, you can check out Home Warranty Reviews to find out companies offering services in your area and get free quotes. Lastly, read the fine print before signing the contract.
A homeowner warranty generally lasts for a year that homeowners can renew at the end of the contract. Some companies also offer warranties for a longer period of time like 2-3 years.
New home warranties are easily transferable. The structural warranty on the new construction homes is only for the original buyers. When that home is resold, the warranty can be transferred to the new owner. As for a home warranty, if the plan is in effect at the time of sale, it can be transferred to the home buyer.
You cannot negotiate with the home warranty companies, though you can avail of discounts. However, while purchasing a home, you can negotiate by asking the seller to pay for the premiums of the home warranty at least for the first year. You can also negotiate similarly on the deductibles. However, first you need to make sure that you’re getting a home warranty with your purchase.
If you are moving, you can transfer the remainder of your warranty plan to new owners by calling AHS on 866.311.1235.
If you purchase a home warranty through a real estate transaction, the coverage begins on the day of closing. However, there is a waiting period of 10-30 days on most homeowner’s warranties. If the previous owner transfers the warranty, the coverage will be continued on the home with no wait.
Should I choose between a new home warranty claim or a homeowners insurance claim?
A new home warranty is different from a home insurance claim. Home warranties cover the costs of repair and replacement of the covered items that break down due to normal wear and tear. On the contrary, home insurance protects against fire, floods, thefts, etc. There’s no competition between the two. If you want you can have both to add extra protection to your home.
A home warranty can be a good deal for you. It provides peace of mind when you purchase a house with older appliances or used systems. It is relatively inexpensive, as the average monthly premium may cost you not more than $100. Lastly, if your covered item breaks down, you don’t need to spend time searching for a professional to fix it. The company will arrange for a trained service technician to diagnose and repair the problem.
A manufacturer warranty generally offers service, repair, and sometimes replacement of the items it is attached to. These warranties last for a year from the date of purchase and are limited to the original buyers. If you are the original buyer of the appliance, you can opt for extended warranties for those items. However, once your manufacturer’s warranty expires, you can purchase a home warranty plan as per your requirements to avoid item-by-item spending.
The length of the builder’s warranty varies according to the different components of the house it covers. However, the maximum duration for such coverage is ten years.