Home warranty plans for first-time home buyers
If you’re a first-time home buyer, you’re likely looking to cut costs any way you can. On top of your down payment and securing a mortgage, you’ll likely pay home inspection fees, appraisal fees, property surveys, legal fees, title insurance, home insurance, transfer taxes and more. Why, then, would you even consider a home warranty plan?
- Home ownership is expensive. For example, if your HVAC system, which includes your heat and A/C, fails from routine use, it’ll cost you over $425 to repair it and $6,400 to replace it, on average. Your homeowners insurance won’t cover that, but a home warranty plan can.
- A home warranty plan can reduce your costs of home ownership. Rather than paying hundreds or thousands of dollars up front, you’d pay a much lower Service Fee up front. Your home warranty plan would pay the bulk of the repair or replacement costs for you.
- Home warranty plans can give you peace of mind that you won’t go broke if something major breaks down.
Today, we’ll answer some questions that you might have when considering a home warranty plan.
What is a home warranty plan?
A home warranty plan is a service contract that provides coverage for your home’s systems (e.g., your HVAC system) and appliances (e.g., your refrigerator). It complements your homeowners insurance and can help you reduce the costs associated with repairing or replacing home systems and appliances.
What items or systems does a home warranty plan cover?
A home warranty covers major household systems and appliances that malfunction or break from normal wear and tear. Here are just some of the things that a home warranty from 2-10 Home Buyers Warranty (2-10 HBW) covers:
- HVAC systems (e.g., air conditioning)
- Electrical systems, including wiring
- Plumbing systems, including certain pipe leaks
- Water heater
- Ovens, stovetops and ranges
Over time, these systems and appliances break down from routine use. Repairing or replacing them can be expensive. A home warranty anticipates these break downs and makes fixing them less expensive and more expected.
How does a home warranty differ from home insurance?
The difference between a home warranty and home insurance is simple:
- Home warranties cover repair/replacement costs for your home’s covered systems and appliances when they break down from routine use.
- Home insurance covers damage from events like weather, fire and theft, along with accidental injury and death.
A home warranty service contract is essentially an insurance policy that applies to home systems and home appliances. Home insurance covers losses from major accidents or natural disasters, such as fire, storms and vandalism. Additionally, if you take out a mortgage to purchase your home, your lender will likely require you to get home insurance.
Though a home warranty is optional, it’s also a wise decision. Home warranties and home insurance are complementary and do not overlap coverage. For more info on why you should have both, read this article.
How does the service contract work for homeowners?
Here’s how the 2-10 HBW service contract would work for you as a homeowner:
- A system or appliance in your house breaks down.
- You check your Service Agreement (always available to customers through Homeowner Portal) to make sure that you have coverage for the thing that broke down.
- Once you confirm that it’s covered, you submit a service request through either Homeowner Portal (quickest way) or by calling 800.775.4736. You can submit requests 24/7.
- We dispatch an approved, insured Service Contractor who works in your area.
- You and the Service Contractor set an appointment for a time that works best for you during normal business hours.
- The Service Contractor visits your home, collects the small Service Fee outlined in your Service Agreement and assesses the problem.
- The Service Contractor determines whether a repair or replacement is appropriate, then begins to fix the problem.
- Once the Service Contractor fixes the problem, 2-10 HBW pays the cost of the repair or replacement.
You are only responsible for the Service Fee to your service provider and any costs that go above the clearly stated coverage limits within your Home Warranty Service Agreement.
Are Home Warranty Service Agreements for systems and appliances transferable between owners?
Yes. If the person you’re buying your home from has an active home warranty after the real estate transaction, they can transfer it to you.
To do so, the seller will simply need to call 2-10 HBW to transfer it to you after you complete the real estate transaction. After the remaining term of the warranty expires, you’d have the option to renew your home warranty coverage.
Additionally, the costs of home warranty coverage can be included in the selling/asking price of the home. In fact, when a seller includes a home warranty in their real estate transaction, it can increase the final sales price of a home.
Why transfer a Home Warranty Service Agreement?
Some sellers already have a home warranty that covers the cost to repair or replace systems and appliances that break down. Transferring that coverage can make their house more valuable to buyers. But buyers, like you, benefit from it, too.
If you buy a home from a seller who transfers their coverage to you at closing, you don’t need to purchase a home warranty, nor will you have to identify all the major appliances and systems in your new home. The warranty company will have already documented the types of coverage the home has and will have a history of repairs or replacements that have occurred.
Having this information can help you understand the nuances of an older or recently built (but not brand new) home. You can keep track of when your major appliances need repairs and identify potential upcoming replacements for major systems like your plumbing.
Do home warranties only apply to new homes?
No. Home warranties apply to pre-owned homes just as much as new homes.
Home appliances and home systems can break down at any time, regardless of how old your home is. Consider these 2 stats:
- About 7 in 10 homes will have a system or appliance failure in any given year.
- 1 in 5 brand-new appliances break down within the first 4 years of ownership.
A 2-10 HBW home warranty can protect you from these unexpected breakdowns by reducing repair costs to a smaller service fee. The best part is that you can purchase a systems and appliances home warranty for your home at any time.
What role does the property play in the type of home warranty coverage you need?
Different factors can impact the type of home warranty coverage you need.
For example, if you live somewhere that has extremely hot and humid summers, you’ll likely use your air conditioning more. More use makes it more susceptible to break downs. In this case, you’ll want a home warranty that covers the cost to repair or replace your A/C, even in the summertime, like 2-10 HBW’s home warranty does.
Additional coverage items—like for a swimming pool or roof leak—can also affect the coverage you need.
How much does a home warranty cost?
The average cost of a home warranty plan ranges from $400 to $600 a year. However, coverage costs can range from $300 to $1,000 or more. It all depends on the coverage you want and need.
With 2-10 HBW, you can pay for home warranty coverage in either monthly installments or all at once annually. For a first-time home buyer like you, either you, the seller or your agent will likely pay for a home warranty at closing. Some agents even buy warranty coverage for their clients and present it as a gift!
A Home Warranty Service Agreement with 2-10 HBW protects you from unexpected repairs and replacements. This can really protect your budget, especially after you’ve spent so much to buy your home.
For more information about the kinds of coverage 2-10 HBW can provide to help you protect your home, check out this page. When you’re ready to start protecting your home comprehensibly, our customer service team will be ready to help you.
2-10 HBW offers the most comprehensive home warranty coverage for homeowners. Let us help you protect your home.