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Home warranty guide for first-time home buyers

A family of four moving into a new home


Being a first-time home buyer can be daunting. It seems like there is an endless number of tasks to complete — from securing a mortgage to scheduling a home inspection to an appraisal. You also have to contend with numerous new costs related to legal and appraisal fees, title insurance and other taxes.
And now that you have found the home of your dreams and made a large purchase, how do you decide how to best protect your real estate investment?

A number of options are available, but not every option may be best suited for you. It's important to know the differences to ensure you get the best coverage that fits your specific needs and your budget. 

Your mortgage company will require you to carry a home insurance policy that covers unexpected events, such as theft, fire or other extreme weather events.
There are also home warranties, which cover future breakdowns of your home's appliances and systems due to normal wear and tear and help you guard against exorbitant out-of-pocket expenses. 

While some people want to understand the benefits of insurance vs. warranty plans, the fact is a homeowner can benefit from having both since there is rarely, if any, overlap in coverage benefits. 

If you are considering purchasing a home warranty for added peace of mind, then you are in the right place. This guide for first-time home buyers will answer important questions you might have when considering whether or not you need to purchase a home warranty. 


What is a home warranty?

A home warranty is an annual contract that covers repairs and replacements of major systems and appliances in your home. This warranty contract complements homeowners insurance, providing the most comprehensive coverage to limit out-of-pocket expenses. 


What kinds of repairs and replacements does a home warranty cover?

A home warranty service contract provides insurance against malfunctions or breakdowns due to normal wear and tear. As a homeowner, you select from an array of warranty plans that fit your coverage needs.

While the cost for plans may vary, in general, most warranty plans cover HVAC, refrigerators, water heaters, plumbing, dishwashers, stoves and microwaves. Additional warranty coverage is usually also available for electrical systems, well pumps, pools, spas and septic tanks. 

Cinch Home Services offers a Complete Plan that provides warranty coverage for 29 items in the home. Learn more about what this warranty covers. 


How does a home warranty agreement differ from home insurance?

A home warranty agreement covers home appliances and systems that break down due to normal wear and tear. A home warranty is essentially a type of insurance policy that only applies to appliances and home systems. Homeowners insurance is often included in a homeowner's mortgage and covers losses from accidents or natural disasters, such as fire, theft and extreme weather.
Home warranties and homeowners insurance are complementary products and do not overlap in coverage. 


Are home warranty service agreements for systems and appliances transferable between owners?

Yes, home warranties can be transferred during a real estate transaction. A home seller may pay for the warranty coverage or the cost may be included in the selling price of the home. 
After the first year, the new homeowner can continue the warranty coverage by re-signing the warranty contract. 


Do home warranties only apply to new homes?

By law, all new homes must come with a builder's warranty that is paid for by the home builder. A builder's warranty is different from a home warranty since it covers the structural elements of the home. This type of warranty coverage is focused on protecting the builder from unforeseen issues that may arise in the first 10 years after the home is built.
A home warranty acts as an insurance policy for homeowners that protects them from the normal wear and tear on appliances and systems from everyday use. While a builder's warranty can only be purchased by the builder for new construction related to a new home or a remodel, a home warranty can be purchased at any time, no matter the age of the home.
New homeowners get the most comprehensive coverage by pairing a builder's warranty with homeowners insurance and a home warranty. 


What role does the property play in the type of home warranty coverage you need?

Depending on the age of a property, the type of property and the items you desire to have covered, the type of coverage and costs can vary greatly. For instance, if you want pool or spa coverage, you will need to ensure the warranty company you select will cover these items. If you have an older home with an aging water heater, this may also dictate which warranty company is best suited to you.


How much does a home warranty cost?

The average home warranty plan cost ranges from $400 to $600 a year, depending on the warranty company. More comprehensive plans are usually available for additional fees. 
Cinch warranty coverage starts as low as $34.99 a month for basic coverage. 


How does the Cinch service contract work for homeowners?

When a covered item breaks, you simply put in a service request online through My Account, which is available 24/7/365.
Your service request will then be shared with a vetted and insured Cinch contractor in your area, who will contact you directly to set up a service appointment. 

Prior to your contractor visit, be sure to read through your service contract to reacquaint yourself with what the warranty covers. As a reminder, you will need to pay a nominal service fee for the visit, along with any costs that exceed coverage limits.
Learn more about home warranty plans from Cinch Home Services. 

Check out this for first-time home buyers guide to help answer important questions about purchasing a home warranty.