Flood Insurance & Obtaining a Mortgage

If your property is located in a flood zone you will have to obtain flood insurance in order to obtain a mortgage. The mortgage lenders will require that the flood policy remain in effect at all times. Even if your mortgage lender does not require you to obtain flood insurance it is a good idea to maintain it, especially if you live along the Texas coast. If you are outside of the 100 year flood plain, flood insurance is not expensive.

Recently congress has made changes to the National Flood Insurance program. As we see here from the FEMA website:

In July 2012, the U.S. Congress passed the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) which calls on the Federal Emergency Management Agency (FEMA), and other agencies, to make a number of changes to the way the National Flood Insurance Program (NFIP) is run. Some of these changes already have occurred, and others will be implemented in the coming months. Key provisions of the legislation will require the NFIP to raise rates to reflect true flood risk, make the program more financially stable, and change how Flood Insurance Rate Map (FIRM) updates impact policyholders. The changes will mean premium rate increases for some—but not all—policyholders over time. Homeowners and business owners are encouraged to learn their flood risk and talk to their insurance agent to determine if their policy will be affected by BW-12

When purchasing you home it will be important for you to have your surveyor do the work necessary to issue you an elevation certificate. This certificate shows how high your property is out of the flood-plain. The higher you are the lower your cost. Since mortgage lenders require a survey already the slight extra expense of ordering an elevation certificate will be worth it. If you property is located within a flood-plain the mortgage lender will require the elevation certificate as well.

FEMA draws up the flood maps after it floods. With weather being unpredictable it makes sense to have flood insurance in place before mother nature strikes. Both you and your mortgage lender will be in a much better position should the unexpected happen.

This entry was posted in News and tagged , . Bookmark the permalink.