Buying your first home – Step 11: Home Warranty
We only have a few more steps to go before we get to the much anticipated closing day.
What is a home warranty?
Not to be confused with home owners insurance, a home warranty sometimes referred to as a residential service contract provides a level of protection for the internal systems of your home. The typical period of coverage for a home warranty is one-year from the date of the home’s closing.
What does a home warranty cover and how does it work?
A basic home warranty will cover heating, electrical, plumbing, water heaters and appliances including free standing ranges, cook tops, dishwasher, garbage disposal, and microwave oven.
If an item covered by the home warranty breaks down, you contact the home warranty company and they will send out a contractor to repair or replace the broken item. The home warranty company does have a service fee ranging from $50 to $100 per trade call.
How do you choose a home warranty company?
Your real estate contract will specify up to what amount if any the sellers are providing you with towards a home warranty. A basic one-year home warranty for a home less than 5,000 square feet is $350 which the majority sellers are willing to pay for the buyers.
Your real estate agent will be able to help you choose a home warranty company by providing you with the brochures of several companies. Narrowing the selection down to just one home warranty warranty company will be up to you. I recommend you compare the level of coverage provided, the amount of the fee charged for a service call, and the company’s standing with the better business bureau to help you decide which home warranty company is right for you.
A couple of things to remember about home warranties are 1) they do cover a lot of things but they do not cover everything and 2) they may not cover the entire cost of the repair or replacement due to limits on coverage amounts.
If you have missed one of the previous steps in our first time home buyers series, you can find them through the links below:
- Step 1 – Rent or Own? How to determine which one is for you.
- Step 2 – Why you should get Pre-Approved for a loan before you shop for a home.
- Step 3 – Which real estate websites to use in your search for a home.
- Step 4 – Get a Buyer’s Agent to represent you.
- Step 5 – Negotiating an Offer and closing the deal.
- Step 6 – The Option Period – what is it and what you do during it
- Step 7 – The Home Inspection – types of inspections, what they cover, and what they cost
- Step 8 – Getting the home insured
- Step 9 – The Survey and Appraisal – what are they and how much do they cost
- Step 10 – Deed Restrictions and Title Commitment – why you need to review them
- Step 12 – The purpose of the final walk-thru and taking care of last minute items
- Step 13 – Closing Day – what to expect and what to bring with you
- Step 14 – Top 5 things to do after you have closed on your Spring Texas home