You may have been looking for a house lately and you saw a sign on the house that says “home warranty”. Well many people do not know what a home warranty is and I have even heard some people say that they don’t want one because they believed it to be some sort of scam. Well, I am here today to spell out exactly what a home warranty is and why you should not only get one when buying a house but you may want to keep one on the house your in now. Even if you don’t plan on moving home warranties. A home warranty is like an insurance policy on your house’s major systems. In other words it protects you from the unexpected expenses of one of your major systems in your house going out. Let me give you an example. I had a woman that purchased a house from us. Whenever we sell a house to someone we offer them a one year warranty as a closing gift. Well this woman purchased a house from us and the house had an older furnace in it but there was nothing wrong with the furnace when she bought the house.
Well during that winter, the furnace went out and she was left without heat during the coldest time of year. She promptly called us to complain but we reminded her about her warranty. She called the warranty company and they sent a technician out the same day to service the furnace. The furnace was not repairable. So without the warranty she would have had to purchase a new $4500 furnace. That’s a lot of money to have to come up with unexpectedly. But because she had the warranty, the home warranty company covered the cost of the new furnace and the installation. She got her new furnace installed the same day. Her only cost was a $50 deductible which is standard for home warranty companies. Now compare a $50 payment to a possible $4500 bill and you can see why a home warranty makes sense. Home warranties normally cover your furnace, central air, washer & dryer, even your roof and sump pumps.
They can also cover things such as busted pipes or electrical systems. Home warranties usually cost about $250-$500 a year and if anyone of these systems goes out then you are usually going to pay more than that. Also, as I mentioned earlier, you don’t have to just get a home warranty when you buy a house. You may want to look at getting one on your own home. First, because it will almost always cost you less to have a home warranty on your home if something breaks, and second, it is a good way of controlling unexpected expenses.