Fannie Mae Foundation: How to Buy a Home

Reading a guarantee

1. Describe the purpose and use of a limited guarantee. Ask students to name other items in the home that may come with a guarantee. Some possible answers are roofing; painting or aluminum siding; new window installation; bathtub resurfacing; or major appliances such as washers, dryers, refrigerators, stoves, and
heating and air-conditioning systems.

2. Bring in samples of other kinds of guarantees. With the students, try to decipher the legal language to understand the protection offered by the guarantee. Point out that some guarantees are not separate documents but are clauses written into the bill of sale.

Working with numbers
1. Have the students try to answer the questions individually. Go over the answers with the group.

2. Point out that it is sometimes possible to get what is called an “extended warranty” on products such as appliances, furnaces, and air-conditioning systems. For an additional fee, any repairs or replacements needed will be made without additional cost. Usually extended warranties are made for one, three, five, or ten years, and are paid either in one lump sum or annually.

Unit 2 : Lesson 3: Deciding how much to offer

Document literacy:
Interpreting product guarantees and warranties

A termite guarantee

In most purchase and sale agreements, there is a contingency that the house must be free of termites. Termites are small insects that can destroy anything made of wood. Various kinds of termites are found in most of the United States, particularly in the South. Most contracts require a seller to pay for a termite inspection of the house. It provides written certification stating that the property is free of termites and that any past damage from termites has been repaired.

If you live in an area where termite damage is common, you may want to purchase a termite guarantee. With a limited guarantee, you pay a yearly fee to a company that handles termite and pest control. As long as you continue to pay the yearly fee, they will continue to treat your home whenever necessary. The guarantee is said to be “limited” because there are usually certain conditions that are not covered.

Working with numbers

Previous Page | Next Page