Why am I being offered a warranty when I just paid for a home inspection and I’m going to be paying for homeowners insurance? What is a Home Buyers Warranty? How is it different from homeowners insurance or mortgage insurance? Am I just wasting money?
You found the home of your dreams and you sit down with your Realtor to put together an offer. As your filling out your offer the Realtor says, "Oh, just one more thing." They hand you a brochure on a Home Buyers Warranty. They ask if you’d like to purchase this for your home and begin to explain its benefits. Unfortunately, the amount of anxiety a buyer is under they usually make the wrong choice. Whether it be to purchase a warranty or not, you don’t get enough time to figure out what it does for you, and if it is in your budget.
It is necessary for a Realtor to offer a Home Buyers Warranty. A Home Buyers Warranty is an added benefit. Depending on your circumstances a Home Buyers Warranty may or may not be right for you. Purchasing a Home Buyers Warranty is never an obligation; so if you find you are asked to purchase one, you can say no. A warranty protects you against additional costs you may endure if something goes wrong with your home, usually within the first year. During the inspection if something was discovered the warranty will not cover this item. Just be sure to go over the contract before you purchase it to find out what the warranty will cover for you.
A Home Buyers Warranty is very different from insurance. With insurance you are paying for continual coverage on all sorts of issues that may arise while you own your home. A warranty only covers you for a short period of time so you aren’t left money out of pocket the first year for something unexpected. Things such as appliances, electrical, plumbing, heating or cooling systems. Structural issues are not covered and just the home itself is under warranty; unlike homeowners insurance where the entire yard, outbuildings, or anyone or thing on the property is also covered.
A Home Buyers Warranty is not homeowners insurance or mortgage insurance. Throughout life it feels like we are insuring and warranting everything. You can probably find coverage for almost anything you can think of. The problem is who can afford the coverage for everything in our lives. So we choose to only insure the things we can’t live without. Which usually consists of our lives, our health, our home, and our cars. There are a lot of times a warranty is just a gimmick, but my own personal vote has to be yes for a Home Buyers Warranty when purchasing an older home. I purchased a Home Buyers Warranty with each of my homes.
My first experience buying a warranty was our of fear. My Realtor explained that I was risking too much not to get one and I paid around $350 for a years coverage. I ended up using the warranty for a dishwasher that leaked and the warranty bought us a new one for $50. I have to admit $50 compared to $300 was pretty good. I also used it for some plumbing issues in the bathroom that would have cost $400 and again I only paid $50. I ended up saving $600 because I purchased a Home Buyers Warranty. My second experience I ended up not needing to use it. But it was nice to know it was there. My third experience was the best experience. About six months after we purchased our home, like clock work, each of our ventilation fans, in all three bathrooms quit working. I called the warranty company and they sent someone out to install three brandnew fans for $50. Then a few months later; we experienced another bathroom plumbing problem; this time the cost would have been $375 and we only paid $50. Then to finish it off a week before the policy ran out our water heater failed and for $50 they bought us a brandnew one. This time around I saved about $500. Sometimes it pays and sometimes it just feels good to know it is there.
Many times you can tack the cost of the Home Buyers Warranty right onto your loan. This saves you having to worry about coming up with the money. If you are purchasing a brandnew home that has brandnew appliances and systems; I’ll leave the choice up to you. I only recommend a Home Buyers Warranty for an older home, because most times a brandnew home with brandnew appliances have their own warranties. Check to make sure. Please read any insurance or warranty policy line by line. You need to know what you are paying for so there is no question when you need to use your coverage. Many times people waste their money on coverage because they didn’t understand how to use it.
