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As the sale progresses, I am learning more. I just got a document from
the bank that had me sign off on the flood insurance. It stated that I
need to have flood insurance for the replacement value of the home OR
to the maximum allowed (typically $250,000.) If the replacement value
is greater than the maximum then they recommend I seek out private
insurance for the non-insured portion of the home.
Thanks for all the comments.
nonbuyer wrote:
> I am considering buying a home that requires flood insurance where the
> mortgage would be around $300,000.
>
> Let's say the replacement value of the house is above $250,000 for
> arguments sake.
>
> My question is how would a bank allow the mortgage since the
> replacement value of the house is less than the coverage amount of
> $250,000 as specified by FEMA? Would their be risk to the bank that
> the house washes away and presents a deficit?
>
> The home replacement in my case is below $250,000 however. My concern
> is that upgrades to the property and future increases in home
> values/construction costs would eventually generate a situation where
> the house isn't fully covered for me, the homeowner. The bank would
> be covered by the mortgage in my case BUT what if I tried to sell the
> property? The next owner may not be able to get a mortgage because of
> the coverage gap and thus my home value would be depressed.
>
> Comments are appreciated!
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Re: How would I get a mortgage over the amount covered by flood insurance?
