After all of the components of the home buying process — negotiations, appraisals, inspections, and insurance — it’s very exciting to (finally) get to closing. But do you know what really happens during this final appointment? Closing on a home can be nerve-racking simply because many first-time buyers don’t know what to expect or what to bring along.
Q. What can you tell me about home warranties?
A. First of all, a home warranty is not the same thing as homeowners insurance, nor is it a replacement for homeowners insurance.
A home warranty provides for discounted repair and replacement service on a home’s major components, such as the furnace, air conditioning, plumbing and electrical system. It may also cover major appliances such as washers, dryers and refrigerators.
Home warranty companies have agreements with approved local service providers. When something breaks down, the home warranty company sends one of its service providers to examine the problem. If he determines that the needed repair is covered by the warranty, he completes the work. The homeowner pays a small service fee.
A home warranty costs a few hundred dollars a year, paid in advance and can vary according to the type of residence covered and the level of service desired. Often they are offered by sellers as a buyer’s incentive to the sale of the home.