When buying a new home, you will be given the option of a home warranty, which is paid for by the seller. This is offered as peace of mind to help you accept the new home without worry. But, once that warranty has expired and reached its year term, you may be wondering if it is worth it to renew the warranty and continue with that peace of mind.
How Home Warranties Work
Home warranties are purchased through a separate company for $300 to $600 per year. For the enhanced policy, you could pay an additional $100 to $400 per year. However, these costs are meant to protect you. You can choose to pay that annual fee, and then if something breaks and it’s covered, you only pay the service fee. Most companies will charge a service fee of $50 to $100 per service call, which you pay to the contractor.
However, when something expensive breaks, most homeowners are surprised to see that suddenly their expensive item is not covered by their home warranty – and instead they have to pay majority of it out of pocket.
Is a Home Warranty Worth It?
Home warranties are one of the highest consumer complaints in the country. Most Americans that invest in a home warranty often find that the investment never pays off. There are some homeowners that will renew year after year – totaling thousands of dollars. Then when they finally submit a claim, they find that their warranty is only willing to cover less than a year’s worth of policy payouts.
There are tons of exclusions in a home warranty policy, and if you read them, you may have noticed that the majority of your high-cost repairs are not covered or have specific exclusions.
Most financial experts agree that a home warranty is not worth it year after year. However, if you are buying a home, it is a free offering by the buyer; therefore, there is no harm in accepting it and it offers you a little piece of mind when purchasing a used home.
When it comes to renewing, you may want to start putting money into an emergency savings fund rather than pay out into a home warranty. If you were to save $50 per month, you could easily afford a costly repair – and not have to worry about your warranty coming back later.
For more tips at closing, or more information on home warranties, contact real estate title services in Miami at Title Lab today by calling 305-440-4150. We can assist you with your escrow and even your title closing when buying a new home.