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Do you need flood insurance?

Posted on October 31, 2012 by Ray Williams (NMLS #216267).

With the devastation of Hurricane Sandy these past few days, it should make us all ask “Do I need flood insurance?”, even though we don’t live in a Hurricane area, we definitely still need to consider if your home is in a flood area and should require flood insurance.

Flood insurance if very important to find out upfront if you are looking to purchase a home. Before even putting an offer on the table you should take the time to quickly find out if the property requires flood insurance.  This is important because if you don’t find this out until later (such as at closing) then this could blow up your whole deal.  Flood insurance is an expense that needs to be calculated into your PITI (Principal, Interest, Taxes & Insurance).  It is added on top of hazard insurance.  This amount goes into your escrow (refer to blog dated 10/2/12 regarding What is an Escrow account).  This added amount could put you over your allowable limits for qualifying.  The last thing you want is for you to go all the way through your qualifications and come to closing find out you DON’T qualify!

Most “for sale” brochures do not include this and even most agents will not readily have the information, although you should always ask them.  So it is extremely important you do your homework.

Here is the link to FEMA’s website and the link to Floodsmart.gov, which has a “One-Step Flood Risk Profile” that can let you know if your home is currently at High, Moderate or Low risk.  If your current home or the home you are looking to purchase is in the “high” risk, then most likely you will be REQUIRED to have flood insurance and will need to get coverage.  If in moderate to low, then it is not required and is up to the home owners discretion.  Here is another help website and article to refer to for flood insurance questions and resources.

I hope you find this information helpful and if you have any questions please give us a call or send us an email.  For more helpful information make sure to subscribe to ournews feed.

Cheers~

Ray Williams

Branch Manager

Summit Mortgage Corporation

rwilliams@summit-mortgage.com

303-779-0591 ext. 101

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