Buying a home is probably the biggest financial investment you’ll ever make. However, purchasing a house is only the first part. You must take other things into consideration such as repairs and home maintenance.
Maintaining your home can be expensive, so offsetting some of the cost is a must. A home warranty can help lower the costs, but at what price? Here’s what you need to know about buying a home warranty.
What is a Home Warranty?
Before you rush to get a home warranty, it’s essential to know what you’re getting into first. Home warranties are used to help people pay the price of either repairing or replacing one of the home’s systems or appliances.
Here is a list of some of the things a home warranty can cover:
- The roof
- The HVAC unit
- The plumbing system
- Various appliances such as washers, ovens and refrigerators
It’s important to note that some of these items may not appear on the warranty you purchase. This is because each home warranty is different, so the items that are covered will vary.
The Cost of a Home Warranty
In most cases of purchasing a home warranty, the annual cost varies between $300 to $600. However, BankRate has stated that a basic plan can cover up to $20,000 of your appliances; but the cost you’ll pay also varies. Another important factor includes the service fee. Every time you file a claim, you’re going to be charged a service fee, which can range from $50 to $100.
How a Home Warranty Works
Home warranties work similar to how an insurance policy does. You pay a monthly premium for the coverage. Should one of your appliances or systems malfunction, you would file a claim with the company and they will contact a professional to fix the issue.
From there, the repair service will see whether or not the issue warrants a repair or replacement. Regardless of what the solution is, the warranty will help pay for it just as long as it’s mentioned in the warranty. It’s also worth mentioning that the cost depends on what needs to be repaired and how severe the issue is.
With this information in mind, the choice of whether or not a home warranty is worth it is ultimately up to you. Be sure to give it a lot of thought before making a final decision.