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Are Home Warranties Worth the Money?

If you own your home or are considering purchasing a home you might want to consider buying a home warranty. Home repairs can often run thousands of dollars and a quality home warranty could save you from having to pay costly repair bills. What is a home warranty? Home warranties are a protection plan for certain components of your home. You buy coverage for a year at a time for between $370 and $650 depending on the company and the coverage selected. The coverage can vary between companies so read the policy carefully to determine what is being covered. Typically, a home warranty will cover appliances, water heaters, furnaces, air conditioning, some electrical and some plumbing. Additional coverage can be purchased for such things as garage door openers, water softeners, freezers, well pumps, swimming pools and roof leaks. Some companies now offer options for such things as improper installations, pre-existing conditions, code violations and removal and disposal of old equipment.

After the initial purchase of the home warranty you will pay a deductible for each service call you have. The deductibles can range in price from $55 to $150 depending on which company you use. If you have a need for service you call an 800 number and the warranty company will send a repair person to your home. You cannot just call a repair person yourself and expect to get reimbursed for the repair. Home warranty companies have contracts with local repair people all over the country and you must use the repairmen that they send out. Some companies are better than others when it comes to response time. The less reputable companies may make you wait several days to get a repair person to your home.

When deciding whether or not to buy a home warranty there are several things to consider. What is the reputation of the company? There are several websites that rank home warranty companies for customer satisfaction you might want to check out. You should also compare the cost of the policy, the service call or deductible cost and the coverage offered. These can vary widely from plan to plan. Also consider the type of house you are purchasing. A relatively new home will usually not require as many repairs or maintenance issues a 100 year old home. If you are buying an older home with ageing mechanicals and appliances then a home warranty may be beneficial. If you are buying a home with newer mechanicals that has been very well maintained, the cost may outweigh the value. Sometimes a seller may offer a home warranty as part of the purchase. If you are getting it at no cost then of course you want to take it. If you are purchasing a home for the first time and you have little or no money in reserve for home repairs then a home warranty is probably a smart choice. If you are considering selling your home you can buy home warranty coverage to protect your home while you have it for sale and then it can be transferred to the new buyer. Also worth mentioning here is that you do not have to be buying or selling your home to get coverage. Many home warranty companies offer coverage to homeowners who plan to stay in their home and it can be renewed annually for as long as you wish to have coverage.

Are home warranties worth the money? The answer depends on your situation. First time homebuyers, owners of older homes or sellers trying to make their property more attractive to buyers can all benefit from having a home warranty. Do your homework. Compare the companies reputation, coverage and costs and you can make an informed decision that may end up saving you thousands of dollars in costly home repairs.

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