What Is A Homeowner Warranty?

Benefits Of Buying A Home With Homeowner Warranty

Gustan Cho Associates are mortgage brokers licensed in 48 states

This BLOG On Benefits Of Buying A Home With Homeowner Warranty Was UPDATED On January 3rd, 2019

Homeowner Warranty

What Is A Homeowner Warranty?

Those who are buying a home, especially first time home buyers can no longer contact their landlord when things break down. There are responsibilities that come hand in hand in being a new homeowner.

  • There are many things that can go wrong in a home
  • Examples of homeowner responsibilities include repairs such as appliance break downs, roof leaks, well and septic break downs among to name a few
  • By having a homeowner warranty insurance policy, homeowners can gain peace of mind in the event things go wrong the first year
  • There are major differences between homeowners insurance policy and homeowner warranty
  • The items that are covered on a homeowner warranty program is not covered by the homeowners’ insurance policy
  • There are various types of home warranty insurance programs
  • Before home buyers, purchase and sign on the dotted line of a home warranty policy, make sure to read and understand the homeowner warranty policy

In this article, we will cover and discuss homeowner warrantees.

New Homeowner Warranty

Home Buyers buying a new home from a home builder, chances are the home will come with a home warranty.

  • New homes can have a full home warranty without a deductible for the first year and a limited home warranty with deductibles up to ten years  
  • Home warranty for new homes for the first year may cover everything which includes appliances, workmanship, mold,  punch lists, and defective fixtures
  • The longer-term warranty normally includes roofing, foundation, heating, plumbing, air conditioning, electrical, and other non-wear and tear items

Pre-Owned Homeowner Warranty

The meaning of the homeowner's warranty

A pre-owned home warranty covers regular wear and tear items.

  • Pre-existing conditions that are found in older homes are not covered
  • Most home warranty programs cost between $500 and $1,000 per year
  • Most home warranty programs do have deductibles and service call fees that can range from $100 and up
  • Home warranty policies can be purchased by the home buyer
  • Many home sellers offer home warranties as part of their seller’s incentive to new home buyers to make the deal more attractive
  • Sometimes realtors purchase home warranty policies to their home buyers as a courtesy for their business or their marketing program

Home warranties are available for one-year terms and can be renewed each year thereafter.  It is a wise choice to purchase a home warranty at least for the first year for a pre-owned home.

How To File A Claim On Warranty

Whatever is on your home warranty agreement, it will be covered.

  • In the event, if the heating system breaks down and it is covered under the home warranty policy,  the policyholder needs to contact the management company that oversees the home warranty program  
  • They will then dispatch a licensed heating contractor who is on their approved vendor list to correct the problem to working order
  • The heating contractor will charge the homeowner the deductible
  • The service fee that is agreed upon the home warranty contract
  • These will be set fees and anything above the deductible and standard service fee will be covered under the home warranty contract and agreement
  • Homeowners will probably get a home warranty renewal contract every year and there might be a renewal fee, depending on the home warranty company

Home Buyers who are looking for a reputable home warranty company, asking the real estate agent for referrals is probably the best bet.  Most real estate agents have a team of reputable contractors and vendors who they normally work with and also know the third party vendors and contractors that are not reputable and should stay away from.

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