Flood Insurance Considerations

This has been a big issue in Florida in 2014 but the govt has kicked the can down the road on hikes in premiums.

Randy, we have an area here in Middlebury that just had a zone change by FEMA and the rates are not as low as you offer, but more in the $5,000 to $6,000 range  and for a stream that has not had issues in at least 25 years

It should be no question if you are living close to or in a flood zone.  It can be sudden and swift and leave you with nothing. 

Randy, every deal I have had that the property was in a Flood Zone has fallen apart because of the costs.  The only ones I have been able to keep together have been the ones the Borrower knew at the time they were making an offer on a house, and was not surprised the house was in a Flood Zone and the Sellers gave them an idea of what they were paying for flood insurance. 

I have not been lucky enough to have a property in a Flood Zone that the flood insurance was low.  Maybe I will get lucky one of these days :)

Randy Kirsch to best of my knowledge, flood insurance in MA is not cheap - if it is mandatory.

Well, I am in northern NJ, and several towns in my area do have pockets of  homes located in  designated flood zones (and, we are 1 hr away from the Jersey shore - no water in sight!). I had a terrible experience this past year trying to get a home sold - the premium  (and they are all set by FEMA) was $2512 a year! FEMA has been undergoing rapid changes, and seems to be constantly evolving. At one point, we were told the new owners would have to pay $3200, then Obama signed a bill (I forgot the name) and the old premiums were then grandfathered in - with a cap, however,  of 18% as a potential increase at the renewal period! Fortunately, for my sellers, after having an elevation survey/certificate done, and appealing to FEMA via a LOMA (letter of map ammendment), their home was removed (by Wells Fargo) from requiring flood isurance!!

The house then (finally) sold - over asking price. Yeaa for the sellers, and ME!

I learned a lot more than I knew (and ever wanted to know!!) about flood insurance!

Just as an aside, please know that when we discuss a "property" is or is not in a flood zone, there are 2 elements to this. The property (land) is one part, and the  house, or "dwelling", is the other part. In my listing's case, there was a small strip of land that was in the shaded flood zone, and only a very small corner of the actual house (dwelling). Following the elevation study, it was determined that the dwelling had a high enough elevation as to be exlcuded from the requirement for insurance. The land is still shown as part of the zone. I could bore you with more detais, but I won't!! :) This discussion of flood insurance can be, and is, confusing, and still evolving.

this is a very convoluted and confusing issue - not to mention FEMA keeps changing things - in our case, the lender (Wells Fargo) only dropped the insurance requirement AFTER FEMA removed the dwelling from the flood zone.

And, for the record, these premiums are set by FEMA - you can't "do better" by shopping agents or insurance companies......and now, enough of this fascinating subject from me - I will return you to your regular programming :)

Randy, my dad was the flood plane map king before he retired from the US Geological Survey back in the 1970's.  It's part of the Interior Department.  They use historical informaion they've been collecting pretty much forever, and it's important to remember that the maps are constantly changing. 

This is good information for prospective home buyers. Many retirees express specific concerns about buying a retirement home in Florida.