Tag: electrical

Difference Between Home Warranty and Homeowner’s Insurance

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You’re on the hunt for a new home. Know the difference between a home warranty and homeowner’s insurance and the steps you can take to ensure you’re covered when finalizing your purchase.

It’s important to note that a home warranty and home insurance are not interchangeable. A home warranty, typically a 12-month contract purchased from an accredited company, acts as a safety net against malfunctions due to normal wear and tear of the appliances and maintenance systems in the home. This includes major systems like HVAC, water heater, plumbing, electrical and major appliances. Our recommended local company, TMI Warranty, L.L.C., offers homebuyers a reassuring peace of mind that these systems will remain in working order after the homebuyer takes possession.

A homeowner’s insurance policy is a 12-month policy purchased from a reputable insurance company, like Mel Foster Insurance, that protects the home’s value and covers losses or damages caused by unexpected events like fire, flood, theft or storm damage. Most lenders require home insurance when you take out a mortgage. While you’re not legally required to purchase a homeowner’s policy when buying a home, you will likely still have to buy some policy to safeguard your belongings.

According to Consumer Affairs, home warranties are paid monthly at between $40 and $60, while the average cost of an annual home warranty is $450 to $600 per year, depending on the provider and level of coverage. This financial aspect is crucial to consider when planning your home purchase. If you’re purchasing a new construction home or one built recently, a home warranty may not be necessary since your major systems should be in good shape.

Shifts in the housing market have given homebuyers more power. Today, there is a better balance and opportunities for mutual concessions during home-buying. Buyers knowledgeable about home warranties may ask that a home warranty be included in the final sale. This can serve as powerful leverage during negotiations, empowering the buyer.

Find more buying tips for homeowners.

What’s hiding behind those walls?

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A well-staged house might be hiding a dirty little secret. Black mold. Fire damage. Shoddy home improvements. Pet stains below the carpet. You can’t always tell the true condition of a home just by walking through, but it’s hard to hide damage from a home inspector.

If you are buying a home, getting a home inspection is one of the single-most important “checks” you need to conduct to make sure the home is safe and secure. An inspection can be several hundred dollars, but uncovering what lies within before you own the house has several advantages.

  1. Peace of mind – you’ll know moving in the actual condition of your new home.
  2. Negotiation tool – if there are issues that need to be corrected, you can lower your offer price or ask the seller to fix the problems prior to closing.
  3. Easy out – if the inspection reveals issues that are too big or unsettling, you can opt out of buying the house.
  4. Plan for the future – the inspection may reveal minor updates that don’t pose safety issues that you may be able to address down the road.

The inspector will take several hours to fully inspect a home. You may be able to be in the home while the inspector works. If not, you should receive a detailed report that includes plumbing, electrical, mechanical and roof analyses. You inspector can usually tell you how many years you can wait before replacing a roof or major appliances or mechanicals including hot water heater and air conditioning unit. You might also be required to have a termite inspection.

Purchasing a home is one of the biggest financial investments you’ll make. Take the extra step to have an inspection and protect yourself from moving into a money pit.


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