Home Warranties: An Extra Layer of Protection, or a Waste of Money?
When you buy your first house the offers will descend on you like a plague of locusts: yard services, cleaning services. home security and, of course, home warranty offers.
Chances are you might have even received a home warranty paid for by the seller or real estate agent when you purchased.
It will eventually expire and you’ll have a decision to make just like those that are considering one of the offers received in the mail.
Home Warranty 101
Warranties vary from company to company in both what they cover and how much they cost. In general they cover:
- Kitchen appliances such as your range or oven, dishwasher and built-in microwave
- Garbage disposals
- Plumbing including a whirlpool tub
- Water heater
- Ceiling fans and exhaust fans
- Heating and electrical system components
If you want additional items in your home covered – air conditioning system, refrigerator, washer and dryer, and a garage door – then expect to buy an “enhanced warranty.”
The upsell lives even with home warranties. Of course, you can also pay for optional coverage of items such as a swimming pool or septic system. $350 to $700 for a one year warranty is the expected price range, although longer and more extensive warranties will run more.
Are they worth it?
My suggestion is to take a longer look at the fine print for the warranty being offered. What is excluded? What are the special stipulations? Exemptions? Loopholes? The fine print is important because, in my personal experiences, they will be deployed by the warranty company more often than not. Twice I tried to use a home warranty benefit personally, both times I was denied on semantics. Many of my clients have had similar experiences.
Do your homework and don’t assume that what a builder or real estate agent provides you at closing is immune from issues.
Amazon.com Best-selling author, Shashank Shekhar (NMLS 8176) is a mortgage lender with Arcus Lending, offering loans for home purchase and refinance. Shashank has been featured as a mortgage expert on Yahoo! News, ABC, CBS, NBC and FOX. He has been named "Top 40 under 40" most influential mortgage professionals in the country.
