Knowing if you should spend money, sometimes up to six hundred dollars on a home warranty is a consideration buyers and existing homeowners should think about. There are many cases when having a home warranty in place is well worth the money and other times that it may not be worth the cost.

Bank owned homes and short sale homes will generally not pay for the buyer to have a home warranty in place and in these cases it may be prudent to have a home warranty. One thing to keep in mind is that home warranty plans generally do not cover pre-existing conditions so knowing that you have an air conditioning unit that does not work is not a reason to buy the warranty. These houses since they have been owned generally by people that are at danger of losing the home and probably lived in the home for many months knowing they were losing the home tend not to take such good care of the property so problem could arise shortly after you take ownership. In this case, you may want to consider a home warranty and the out of pocket expense might be money well spent.

If the home you are buying is fairly new, say between one and 5 years, then a home warranty could be something you forgo at the moment because most things that go wrong don’t happen in the first few years that a house is built. A home that is six to twelve years old will likely start having things like the water heater go out, garbage disposal needing replacing and air conditioning units needing repair so paying for a warranty can paid off.

A home warranty is somewhat like health insurance because you have the policy in place as a preventive measure to costly repairs. You will have a co-pay or a service call of around fifty five dollars and the remaining repair or replacement should be covered. This can save you thousands of dollars in costs. If you own rentals then this is also a good reason to hold a policy in place.

If you choose to purchase a policy or have the current homeowner purchase a policy be sure you know what you are buying, what is covered and what is not covered prior to paying for the warranty. Most policies are for one year and renewing it will be something you have to decide a year later. For some, it never fails, they have the policy and nothing happens but the moment they decide to let it go then a major repair hits!

A home warranty is basically a service plan that usually runs for a full year after the purchase. This plan provides funding for repairs of replacements of systems and appliances included in the property. Its typical coverage is the mechanical and electrical components of a new home such as furnace, AC or other heating and cooling equipment. The damages incurred must be solely due to ordinary wear and tear throughout the years of operating the items. This plan can be purchased before closing escrow but must be paid during this process.

Note that you have options in buying the warranty. You can get it from companies or the owner builder has already bought a policy attached to the property. But according to the Home Building Act 1989, owner builders have the responsibility to purchase home warranty within six years of the completion of the home construction. And if at the point of sale the seller has not disclosed the property is owner built and it still does not have attached guarantee policy, fines up to $22,000 will be his liability. Plus, the purchase contract can be deemed void as well. In addition, you must know about the kinds of warranties such as the new home and existing ones. The former is the common type offered by many builders so as to attract more buyers. This is usually a ten-year coverage of the home structure. In an existing home, both ends of the purchase deal can negotiate upon buying a one-year warranty that is the same as an extended service contract. Either option, home guarantees cost from $350 to $600.

There are many advantages upon purchase of a home warranty. Real estate agents especially encourage buyer clients to get this plan. This is beneficial because once you move into the home, you are saved from facing major expenses for replacing heating and cooling equipment or other damaged components. And the warranty can give you some sort of convenience. Once any of the covered systems or appliances is not working, you have the right to claim assistance from the warranty company. When you call them up, they will send a contractor to do the work. Hence, you are saved from scouring for a professional serviceman.

Just so your decision can be more guided in getting a warranty for your new home, you also have to take note of some down sides. Although the company will send a contractor right away to repair the damages, you will still be charged for the repairs, however, this should only be a minimal amount. Further expenses can also be expected as some warranties cover home items you actually did not anticipate being included. For example, a one-year warranty for an existing home may include repairs for heater problems but it does not actually cover for the damage costs if it has been due to rusting. You have to shoulder the expenses if this is the case then. You would also have to pay the service-call fee of the contractor which can be from $50 to $100.

Thus, you really have to be thorough in assessing the details of the warranty presented to you whether by the seller-builder or a third party company. It would be better if prior to purchasing, you already know about the timeframe, meticulously itemized list of covered areas, dues and claim process of the plan. It is really crucial that you carefully read and understand the contract. Most companies use this clause, “We reserve the right to provide cash in lieu of repair or replacement in the amount of our actual cost (less than retail) to repair or replace such item.” This may not necessarily work for your benefit as some companies discount the repair costs to an extraordinarily low price. You also have to check on the credibility of the warranty company. Check out web forums on home warranties wherein clients have expressed their approval or disappointment regarding the guarantees they have. Do research about the track record of the company. There are many online articles as well that review the service and coverage of some companies.