If you're out looking for Excelsior homes for sale, there's a good chance that, at some point, you'll be offered a home warranty. Maybe the seller of your new home will offer to buy one to sweeten the deal, or maybe you've started receiving offers for home warranties in the mail. Either way, you probably have two very important questions: What is a home warranty, and do I need one?

Home Warranties vs. Homeowners Insurance

Purchasing homeowners insurance has been common practice for a long time, but home warranties have also become increasingly popular in recent years. And while the two may sound similar, there are some crucial differences. 

• Homeowners insurance works like any other kind of insurance, offering financial protection for you if your home is damaged in any number of ways. The specifics depend on the details of your policy, but it's typical for homeowners insurance to cover theft, vandalism, and fire damage, as well as certain natural disasters. Damage from wind and hail are usually covered, but flood damage and earthquake damage often require a separate policy.
  
  
• A home warranty is not an insurance policy. It's more like a service contract between the homeowner and a home warranty company, which pays for (or reduces the price of) repairing or replacing major home components if they fail or break down. Home warranties typically cover things like the furnace, air conditioning, electrical system, and plumbing. Major appliances may also be covered.

Is a Home Warranty for You?

Home warranties offer peace of mind for many homeowners. In some situations, it can be well worth the cost (usually a few hundred dollars a year) to get a warranty, but not always. In the end, it comes down to what kind of home you're buying, how much you can afford, and whether or not you would prefer to pay for the warranty upfront, or simply prepare for the cost of repairing and replacing parts of your home as they come up down the road. 

Also, keep in mind that home warranties typically cover the failure of home components and/or major appliances over time due to regular wear and tear. They do not cover breakage due to misuse or lack of maintenance. They also don't cover damage due to theft, fire or natural disasters—that's what homeowners insurance is for. 

• Get a home warranty if you are buying an older home with older appliances that may be nearing the end of their natural lifespan. You may also want to get a home warranty if you can afford the upfront cost of the warranty, but don't have enough of a nest egg to pay for replacing major house components in the future. It might be a matter of paying a few hundred now, or several thousand later.
  
  
• Don't get a home warranty if you are buying a new build home with all new appliances. In new homes, the plumbing, electrical, and heating and cooling systems should be covered from a warranty from the builder, and all the new appliances should come with their own warranties. A home warranty would just be duplicate coverage.

If you do get a home warranty, only get one from a reputable company. Remember to read the agreement carefully so you know exactly how much you will pay and what is covered. 

Still not sure if a home warranty is right for you? Contact Homes by Joel today to learn more. We have years of experience helping families find their dream homes in the Excelsior, Minnesota area, and we're committed to helping you make smart decisions.