Friday, December 16, 2011

Refinancing? Check the lay of the land first.

If you are looking at refinancing, you may want to check with your insurance first.

The flood maps in my area and many areas of California took effect in August 2008 and are causing some people to think twice before diving in to todays low mortgage rates. The problem is that when you bought your home and got your current mortgage, you may not have been in a FEMA designated flood zone.

In August 2008 the new maps were finalized and put into use. In many areas the maps had not been updated in decades. Changes to the topography caused by construction, erosion, new roads and other changes in the landscape have changed the way water and debris will run if you get enough rain or a large pipe break water and who knows what could end up in your living room.

How does all this affect your loan? If you are in a FEMA designated flood zone A or V, the lender usually will require you to purchase flood insurance. Flood insurance can cost thousands of dollars a year in addition to your homeowners insurance and mortgage payment. For some people, the cost vs. the change in loan payment does not make sense.

If  you got your loan prior to August of 2008 and are now in a FEMA designated high risk flood zone, contact your insurance agent to see what a flood insurance policy may cost. You can also check here to see if your home is in a high risk flood zone. You could also contact your county flood control to challenge the determination or FEMA, but you could be tied up in that process for a long time. A survey by a public surveyor may be required.

1 comment:

  1. I had a friend that this happend too. They did get a survey done, and it saved them some money, but they still had to buy flood insurance on a home they lived in for 5 years!


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