Christine Lindemer's Blog
You may have heard about home warranties, but are unsure of what they are. A home warranty is an excellent addition to your home insurance and has a particular function. When you buy a home, the last thing you want to worry about is things breaking or malfunctioning in the house after you buy it. Buyers fear the expenses they may incur if items in the home start to break down shortly after the property becomes theirs. As a first-time homebuyer, a home warranty can be incredibly helpful since you may need a crash course on home maintenance.
Depending on what’s the norm for homebuyers locally, either the buyer or the seller will pay for the home warranty. Some sellers pay for warranties up front as an extra assurance to the buyer of the property they’re about to purchase. Sellers also use this as an excellent tactic to “wash their hands” of the property. The buyer won’t need to contact the seller if something goes wrong with the property. A home warranty is a fairly inexpensive way to show buyers that appliances and the home itself have been well taken care of. Occasionally, real estate agents will give buyers a home warranty as a gift for their business. Usually, this is done for higher-end homes.
Home warranties aren’t very expensive. They usually range in price around a few hundred dollars in cost. The cost is based on a yearly rate and can be renewed each year at a slightly higher premium.
How Do The Warranties Work?
The warranty provider works with specific companies for different purposes. When the homeowner calls the warranty provider to let them know there’s a problem, the service provider will call the homeowner to make arrangements to fix the problem. If an appliance cannot be repaired, the warranty company may replace the item. There are usually small service fees associated with these repairs and replacements.
Is Anything Not Covered?
A home warranty will not cover numerous items around the house. These items include:
Outdoor fixtures and plumbing
Indoor plumbing fixtures
Some appliances may not be covered
Home warranty plans can vary based on your location and the type of policy. Make sure you review what’s covered before you finalize any home warranty. It’s an individual choice that homeowners make to have a peace of mind when moving into a new place.
It’s a long road to get to the status of being a homeowner. Once all of the i’s are dotted and the t’s are crossed at closing, you’ll be handed the keys to your wonderful new place to live. Now, you’ll have a huge responsibility on your hands as well. You’ll need to pay the mortgage monthly. You’ll need to perform regular maintenance around the home. You’ll also need to pay for things like home insurance, utilities, and more. Everything that happens in your home when you have those keys is your responsibility.
Once you have unpacked and settled into your new place, there’s a seemingly unending amount of things to do including organizing, unpacking, painting, decorating, cleaning, renovating, and so much more. You really need to take a break from all of that and take the time to bask in the glory of homeownership for a few minutes.
Know What You Have Accomplished
Buying a home is not something that every person can achieve. It takes a lot of hard work, dedication, and persistence to save up money, find a home you love, and close the deal. You’ll also learn a lot through the process of buying a home. You’ve established a sense of independence and freedom through buying a home; you’re truly living the American Dream.
You Have Something To Call Your Own
As a homeowner, you are not the master of your own domain. Anything that you wish is your command. Any hobbies you have, whatever type of decorations you want, and the types of chairs you like to sit in are all your choice in your own home. Once you own a home you don’t need to worry about the unruly neighbors upstairs or the landlord who wouldn’t ket you paint the walls. Do you want to plant a vegetable garden in your yard? You can! There’s no one there to tell you that you can’t. Have a blast using your yard and your home the exact way that you want it. Now you can feel free to have friends over and entertain to your heart’s content. This is one of the best parts of owning a home.
You Now Have A Better Financial Future
Buying a home is a smart investment. You’re contributing positively to your financial future. Every mortgage payment that you make is contributing to something that you own. There’s no security deposits and no fees for your pets. The longer you live in your home, the more equity that you’re building up since your property is increasing in value over time. If you continue to make timely payments and upkeep your home properly, you’ll be able to really see a return on your initial investment on the home.
If you're currently renting an apartment or house, it makes good financial sense to consider becoming a homeowner in the foreseeable future. There are pros and cons to owning your own home -- and it's not for everyone -- but for most people, the advantages far outweigh the disadvantages.
An exception would be if your job requires you to relocate frequently. In that scenario, the potential benefits of building up equity in a home would be greatly diminished.
On the other hand, if you plan on staying put for more than a few years, then the tax benefits and investment value of owning real estate could put you on a stronger financial track than if you continued shelling out your hard-earned money to a landlord. You've probably heard the argument before: "If you pay rent, you have nothing to show for it at the end of the year". However, when you buy a home, an increasing portion of your monthly payments is applied to your actual ownership of the property (as opposed to how much you owe the bank).
Tax Advantages of Home Ownership
In most cases, you can deduct all of your home mortgage interest from your federal tax returns, according to the IRS. More specifically: "The only costs you can deduct are real estate taxes actually paid to the taxing authority, interest that qualifies as home mortgage interest, and mortgage insurance premiums."
However, since everyone's financial situation is different and there is no "one size fits all" approach to financial management, it's always best to consult with an experienced CPA, enrolled agent, or knowledgeable tax preparer. There may be other tax benefits you could qualify for as a homeowner, too, including getting tax credits for installing a solar energy system. The government's Energy Star program says tax credits on new solar energy systems are available through the year 2021.
Getting the Process Underway
Two key steps to becoming a home owner are finding out your credit score and meeting with a mortgage lender to determine how much of a real estate loan you could qualify for. An experienced real estate agent can also provide you with a wealth of guidance and information on how to become a homeowner. They can fill you in on many of the exact steps, requirements, and advantages of buying your first home. A buyers' agent can also help you assess your readiness to take the plunge into home ownership.
In addition to finding out your credit score, which will impact your mortgage interest rate and the type of loan you may qualify for, other vital information can be gleaned from a detailed personal budget. Although the amount of rent you now pay will provide some insights into your potential house-buying budget, there are a lot of variables which will impact how much of a mortgage you could comfortably afford.