Buying A Home - Understanding Home Warranties For A Pre-owned House

As you get ready to finalize the process of buying your home

, the last thing on your agenda will be the option of buying a home warranty. The purpose of these warranties is to repair and replace covered items in your home that malfunction. If you think your home could use the protection of a warranty, make sure you apply for one before the close of escrow.

A home warranty is designed to repair and replace certain mechanical systems and built in appliances in your house, such as the plumbing, furnace, and electrical wiring. For an additional fee, you can add coverage for the air conditioner, jacuzzi, swimming pool, and roof. If you should have a malfunction with any of these, you can call your warranty company to check it out. If the insurance company deems the repair is a covered benefit, you'll pay a flat fee for parts and labor which ranges between $60.00 to $100.

Sad to say, you could devote an entire evening and more pouring over the numerous consumer complaints filed against home warranty companies. Homeowners are shocked to discover the pre-existing condition clause in most warranties exclude coverage on pre-existing problems. If you are considering a policy that excludes pre-existing conditions, be aware you'll only receive coverage for new problems.

Additional exclusions can include repairs as a result of improper maintenance or servicing, incorrect installations, and areas with restricted access to inspection. Some policies won't cover a repair unless you pay out of pocket to upgrade the system to current building code. Be aware most policies exclude repairs not caused by normal wear and tear.

If you shop around, you'll discover most warranty policies are priced somewhere between $300 to $1000 per year depending on the home size and type of benefits you choose. As you search for your new home, you'll find most sellers willing to include the first year of coverage as a gift for buying their home. Even your agent may even be willing to pay for the first year so you'll be satisfied with their service.

But if you have to cover the full cost of the home warranty policy, you're probably smarter if you invest money each month towards an annual repair fund to cover unplanned repair problems. You should aim for a goal of $5000 each year to cover future repairs.

However not all warranty policy holders are unhappy with their policies. If you happen to be fortunate enough, you may find a caring and helpful technician who gets the warranty business to cover the repair. Make sure you thoroughly checked out each warranty policy and understand all exclusions.

If you live in a state that contains a government agency which supervises home warranty companies, inspect the prospective company's complaint history before you sign up with them.

by: Sarah P. Shimanski

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