You’ve gone through the process of getting a mortgage loan,
found the home you love and are finally ready to move in. Moving
day arrives and you get into your new home. No sooner have you
just settled in and the air conditioner breaks down. What now?
Not an uncommon problem. What happens when something goes wrong
with your house and you just moved in? You now own the home and
it is your responsibility to make repairs. One option is to have
a homeowner’s warranty. A homeowner’s warranty is
an insurance program that offers buyers of a home a warranty against
certain physical defects, such as faulty roofing, heating, electrical
services and plumbing.
This insurance premium is a relatively low cost to repair major
defects in a home. New construction is covered by a national program
and there are many excellent programs that you can purchase for
One thing to remember is that as coverage increases and the more
items you want to have covered in the policy, the more costly
the insurance becomes. For example, if you wanted to cover all
appliances, you have to weigh the cost of increasing coverage
with the replacement cost of an actual appliance. The increase
in insurance premium may be higher than the actual cost to replace
that faulty stove.
The cost of a homebuyer’s warranty can be covered by the
buyer, seller, and real estate agent or sometimes in new construction,
it becomes an added benefit that the builder will buy to avoid
future liability. This is due to the fact that very often in new
construction, it is often the builder that has completed defective
work, so an inexpensive insurance policy becomes a necessary cost
to protect against significant defects.
As with all buying decisions, make sure you shop around as there
can be a significant difference in what is covered and the cost