People hear a lot over their lifetimes about how they can save money. Some of these tips work, while some can, in fact, leave you out of pocket, with homeowners spending on average nearly $5,000 in repairs in the last year. When it comes to your home, it’s best not to take any shortcuts. Instead, consider long-term investments like a home warranty. Not only can a great home warranty keep your home happy and stress-free, but it can save you thousands of dollars in the long run. To find out how you can do this, here’s exactly how a home warranty saves people money, as well as the different kinds of options to suit you.
How home warranties can save you money:
Work with a budget
When countless repairs and replacements in your home add up, it’s almost impossible to stick to a budget. This means costs can quickly spiral out of control, often leaving you with more to stress about. With home warranties, your costs are covered with a simple monthly or yearly set rate, making budgeting more than easy.
The best part is that home warranties can be personalized to suit the kind of cover you want. This means you can work with as large or as small a commitment as you need. Bear in mind that the cheaper your home warranty is, the less it is likely to cover. Though you might be wary of upfront costs, you’ll quickly see how your set rate can pay you back in just a few, simple call outs.
No more repair costs
Homes are often more stressful after a sale has gone through. For many families, even minor cosmetic damage or scrapes can cost a lot when there’s a lot of them. With home warranties, repair costs are automatically factored into your set rate.
Though the warranty won’t cover intentional damage to appliances or your home, average wear and tear or faulty items will be covered. It will also save you the hassle of having to fix some of the damage yourself, avoiding mistakes and devaluations to your home value.
Replacements might be covered
It’s true that not all home warranties cover replacements, but there is a huge spectrum of warranties that include full replacement costs within their rate. Before you jump into what seems like a good rate, make sure you read the small print to see whether that includes replacements.
If so, this is a sure-fire way of saving lots of money. For example, most home warranties cost between $300-600 a year, not including the service fee. With the cost of replacing a hot water heater being around $550, your warranty pays for itself within one instance.
There isn’t a one size fits all when it comes to home warranties. You can protect your home with a warranty and cut costs, but only if it’s the right kind. With various options out there, it’s best to get the lowdown on what they are:
Systems and Appliance home warranties
When people talk about home warranties, this is typically the type of home warranty they are referring to. As one of the most commonly purchased, it covers homeowners for repairs, breakdowns, or faults after the sale period of a home has ended. Typically, it is new homeowners that benefit from this warranty the most. It is also known as a Home Service Agreement.
There are some variations on it which cover current homeowners looking to save money. It is not to be confused with an Appliance Warranty, which covers an individual appliance for repairs or replacement upon purchase.
Homeowners often have a hard time defining between a home warranty and homeowner’s insurance. Though similar, they will cover you for different costs- even within the same incident.
One of the most commonly used examples is if your washing machine breaks down. Your home warranty will cover the repair or replacement of the machine, whereas homeowner’s insurance covers you for any water or electrical damage that occurs during the breakdown.
Remember that homeowner’s insurance regularly requires you to pay excess if the cost of repairing the damage exceeds that which the insurance covers you for.
Structural Home Warranty
A structural home warranty is always needed when someone is in the process of building their home. This may be obtained by the builder, or the homeowner. In any case, it covers a homeowner for any defects or damages from workmanship for the first few years after the building has been completed.
In the small chance your new home experiences major structural problems, many structural home warranties cover you for the first ten years after the build is completed.
Remodeler’s Home Warranty
If you’re considering remodeling your home, there’s a home warranty that also covers you here. Though similar to the Structural Home Warranty, it only covers the building of a new part of your existing home.
This cover is usually only for structural change, covering any damage that happens to the new part of your home, or damage that this new remodel does to your current structure. For any new appliances in this part of your home, homeowners are often recommended to update their Systems and Appliances home warranties.
Disclaimer: I received one or more of the products or services mentioned above for free in the hope that I would mention it on my blog. Regardless, I only recommend products or services I use personally and believe will be good for my readers. I am disclosing this in accordance with the Federal Trade Commission's 16 CFR, Part 255: "Guides Concerning the Use of Endorsements and Testimonials in Advertising.