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VA Loans and Builder’s Warranties–What You Should Know

January 11, 2011


VA Loans and Builder’s Warranties–What You Should Know

Applying for a VA mortgage includes reading a LOT of paperwork. There are so many forms, agreements and fine print that some people feel overwhelmed when it’s finally time to sign on the dotted line and commit to buying a property with a VA guaranteed loan. But house hunters should take care to read all the paperwork they sign carefully or consider hiring a lawyer to assist with paperwork that’s not easily understood from a legal standpoint.

If you’re buying a home covered under a one-year builder’s warranty, this is especially important. Knowing the specifics of that warranty, what it covers and what it does not can save time and money later should the buyer feel the need to invoke the warranty for any reason.

The Federal Trade Commission advises house hunters to pay close attention to the duration and nature of warranty coverage; many builder’s warranties contain language describing coverage on workmanship, materials, even mechanical equipment like central air and heating units. Most warranties protect the buyer against major structural defects, but many also have a list of exclusions or implied exclusions.

According to the FTC, “Most warranties for newly built homes…do not cover expenses an owner may incur as a consequence of a major construction defect or warranty repair, like the cost of having to move out of one’s home while repairs are being made.”

Builder’s warranties, according to the FTC,  usually do not provide coverage for cosmetic issues like cracked drywall, cement or tile. These warranties often exclude appliances and component items protected under a manufacturer’s warranty.

Read the terms of your one-year builder’s warranty carefully. If you need to make a claim, knowing in advance what is covered and what isn’t is a major help, but just as important is knowing the claims submission process as spelled out in the warranty. Failure to follow the warranty instruction for making claims could slow down or even in some cases invalidate your claim. Know your rights, but also know your responsibilities.

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