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Purchasing a Home Warranty for your New Home

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What is a Home Warranty?

A home warranty is a policy that is used to pay for common, everyday repairs to things that can go wrong in your home. For example, a home warranty will cover the cost of repairing a central cooling system or a roof that develops a leak. A home warranty is not an insurance policy , rather a way to budget for the expenses of normal repairs.

When you purchase a home warranty, you will pay an annual premium. This may be due in one lump sum, or broken down into quarterly or monthly payments. This is the money that establishes your warranty, and guarantees coverage. When something breaks in your home, and you need to file a claim, you will be responsible for a service charge. The service charge is a predetermined amount, usually between 30 and 100 dollars. This covers the cost of repairs. These are the only two expenses involved in home repairs when you have a home warranty.

When something goes wrong in your home, you file a claim for service. You call the phone number of the home warranty company, and explain the situation. They will then send someone out to complete the repairs. The home warranty company does not have repairmen, but has established relationships with various repair people in the area that they cover. It is important to ask, before you buy a home warranty, whether the company has repair people in your area.

Why Should I Consider a Home Warranty When I Purchase a New Construction?

No one can argue that moving into a newly constructed home is a wonderful luxury. With the smell of new drywall, the sleek countertops and spotless floors, it is easy to feel like you will never have to do any repairs again. Of course, you know that this is not true, it will not be long before the first problem develops, the heating doesn’t kick on in the fall, or your dishwasher stops getting dishes clean. These problems are more stressful because they are coupled with a mortgage payment.

A home warranty is the perfect solution for a tight budget. Home warranties for new constructions are very affordable, and covering your home now ensures that you can budget effectively for whatever problems develop down the road. If you have a current home warranty, you know that you will never be blindsided by the cost of home repairs.

Is a Home Warranty a Waste of Money When Everything is New?

The traditional home warranty must be taken out when the home is new. Some companies are now writing plans for older homes, but the policies are more expensive and may have limitations or exclusions that make them not the best deal. A home warranty taken out on a new construction, and kept current, is the best way to get your money’s worth. While many things, like new appliances, may go a decade without any trouble, home warranties also cover the problems that crop up occasionally in a new construction, including leaky pipes and minor electrical problems. Some home warranty plans will also cover the cost of maintenance. What a home warranty will not cover is the cost of repairs due to improper installation or excessive wear. This means that whether or not maintenance is covered, it is important to stay current on your maintenance and make sure that all installations are properly installed, to avoid voiding your warranty.

Additional Benefits of Home Warranties

When choosing a home warranty company, shop carefully. To maintain the benefits of a home warranty, you must start the protection when your home is complete, and continue it uninterrupted. While some home warranty companies are beginning to add policies that allow you to pick up a policy at any time, traditional home warranties are coupled with the purchase of a new home.

It is important to purchase a home warranty that is transferable. Very few of us will live in one house for the rest of our lives, with people moving an average of every five years. When it comes time to sell your home, real estate agents have found that the homes that have home warranties sell much faster than the equivalent homes without these warranties. To get this benefit, the home warranty must be transferable. If not, when you move, the home warranty coverage ceases.

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