The Home Buyer's Korner

Information presented should be used for educational purposes only.

June 16th, 2015

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GREATER LAIE/HALEIWA HAWAII

The Home Buyer’s Korner

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Home Warranty Programs

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Purchasing a home warranty can be a real benefit to many home buyers, especially if your home and it equipment is a little dated or any manufacturer warranties have run out. The last thing you want when you buy a home is to pay for expensive repairs after you’ve moved in and diminished a lot of your cash reserves after you purchased a home. One way to protect yourself, your home and your investment against unforeseen equipment malfunctioning is by purchasing a home warranty.

Generally, home warranties are convenient for people who are not handy with doing repairs or don’t have a lot of time to deal with these types of issues. If you do not like the challenge of taking care of the home repairs yourself and do not have friends or family who can assist, it can be a good security blanket to ensure your appliances are covered from calamities.

Often times you’ll be offered a home warranty contractual agreement when you buy your property and even sellers includes them as an incentive to purchase their home and covers the first year after closing.

Selling a home with a pre-paid warranty can increase the appeal of your home and likely make the home more attractive to potential buyers. First-time buyers especially are enamored with the idea of not having to worry about appliance or system repairs.

In addition, when buying a home warranty the seller receives coverage during the listing period. This means that if a problem in a home system occurs while under contract or during the pre-contract phase of listing your home, the warranty company will carry out their duty and resolve the issue. This fact alone can save a deal if something like the air conditioning or heating goes out.

If you’re interested in a Home Warranty ask your real estate agent for references and find out who offers the best programs. Don’t forget that as a home buyer you can certainly include one as part of your offer to purchase.

Home warranties aren’t regulated and very widely on what they will and will not cover, so it’s important to read the fine print and selecting one that affordable and provides you with the security level you’re looking for. Generally a home warranty includes covering the expenses when a major appliance fails and should give you piece of mind knowing you will not have to shell out a lot of money if something breaks.

A home warranty is a contract between a company and the home owner which includes discounted replacement and repair services. It accounts for major home components like your electrical systems, plumbing, furnaces and other major equipment. Premium packages can include appliances like refrigerators, stove and washers. There are many different protection plans that cover both the most basic components, as well as other optional items. The more detailed your coverage is, the more you will need to pay for the warranty.

It’s important to understand that home owners insurance and a home warranty program are not the same. Home Owners Insurance covers issues such as flood, fire or property crimes. Anything that affects the structure of the building is covered by home owners insurance and mandatory if you’re using a mortgage to purchase your home. Home Warranty Programs are optional and cover specific components of your home.

A good home warranties isn’t cheap and often cost between $300 and $1,000 dollars a year. Fortunately, most warranty programs allow you to pay for the program upfront or in installments.

You can choose between basic or extended warranty plans and items like square footage can impact how much your warranty will cost. It’s also worth knowing that you need to insure separated structures like a pool or guest house, while garages are considered part of the primary estate.

Having a home warranty doesn’t mean you’re free of spending money for repairs and they doesn’t cover the cost of any clean up needed after an appliance has malfunctioned and created a mess.

Most home warranty programs charge an inspection fee from $40 to $125 each time you call in a broken or defective items in addition to your annual premium. If the situation requires more than one type of expert, for instance an electrician and a plumber, you may be required to pay for each, so be sure to read any agreement carefully before signing one.

There are also specific types of damages or items that are not covered by the warranty, so be sure to read your agreement carefully and know what it covers. A warranty company can deny a claim if they determine you have neglected or improperly maintenance your equipment. That can include simple issue like not replacing air filters on our heating and air conditioning system.

When a failure occurs you’ll need to call your warranty provider who is responsible for getting in touch with a licensed contractor to inspect your equipment. The contractor will then determine if the item needs to be replaced or can be repaired. Home warranty companies have list of approved contractors and different service providers, so you won’t be able to make your own selection as to who inspects, repairs or replaces your equipment.

Purchasing a home warranty requires an analysis of your situation, age of the items you are having covered, your ability or desire to absorb repair or replaces costs, as well as your level of repair expertise. Although a warranty may seem like the perfect solution to evade risks, you still need to determine whether the service is worth the cost.

If your home isn’t complete with high end equipment that have costly replacement or repair cost, the service might not pay off in the long term. The best thing to do is to inspect the homes equipment and determine its age and life expectancy, then weight the risk against the programs cost.

If your air conditioning unit compressor is fairly new and the kitchen appliances can be inexpensively replaced maybe the annual premium and cost for inspections simply don’t make sense. A good real estate agent will have made these types of assessments when checking out the home and their opinion should be valued, but an additional level of security is to get a home inspection and ask the inspector to individually address all the equipment and their condition as well as the life expectancy.

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HAWAII HOME OWNERSHIP TOOLS

Your Home Purchasing or Refinancing & Renovation Tools,

Home Improvements, Home Renovations,

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase.

Here are just a few of the home improvements

you might consider with any Home Renovation loan

Repair or replace a roof

Install, replace or repair gutters and downspouts

Replace, repair or upgrade your HVAC system

Repair or replace plumbing

Install, repair or replace electrical systems

Kitchen remodeling (including the purchase and installation of appliances)

Bathroom remodeling, Full interior painting, Total exterior painting

Repair or replace a septic system and/or well

Disability access (wheelchair ramp, elevator, widen doorways)

Build, repair or replace deck, patio or porch

Basement waterproofing and finishing

Abatement/Stabilization of lead-based paint hazards

Replace old windows, Room additions, Finish an attic

Add a second story to your home

Replace a termite damaged sill plate (a water-damaged sill plate also)

Possible landscaping items such as correction of grading & drainage problems,

tree removal, repair a driveway and sidewalks

FHA 203K

Your Home Purchasing or Refinancing & Renovation Tool

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase

FANNIE MAE HOMESTYLE

The Conventional Alternative to FHA 203K

Great for Real Estate Investors and Second Home Renovations

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase

USDA RURAL DEVELOPMENT

Up to $10K for Home Improvements, Renovations or a Simple Remodel

Mortgage Loan Officers, Real Estate Agents & General Contractors are ready to assist you

A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision-making process.

This simple home inspection tool makes your ultimate buying decision a smart one.

To print this document click on “Open in New Window” located at the lower right corner;

click on “File”; then click on “Print”. In the center of the screen you will

have the option to “Create A Printable PDF of the Presentation”.

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