You have recently accepted an offer on a home in a great area, but there is one problem: to get your mortgage, you have to get flood insurance. While this is not a deal breaker, it may leave you wondering exactly how much insurance on the property you need to have. In Dallas Texas, you want to protect your home, but you don’t want to pay for more coverage than you need. How much flood insurance do you really know?
WHO NEEDS FLOOD INSURANCE?
You may be required to carry flood insurance, depending on the conditions under which you purchase your home. If you have a federally backed mortgage, such as a FHA loan, and your home is located in a high-risk flood zone, you will need to purchase your home flood insurance. If they are located in a flood zone, many mortgage lenders also require homeowners to carry flood insurance. For homeowners who do not have a mortgage, if you live in a high – risk flood area, it is advisable to carry flood insurance.
HOW WILL I KNOW IF I NEED FLOOD INSURANCE?
For most homeowners, when you receive the disclosures during your first viewing, you will be told that the home needs flood insurance. Usually, the disclosures say the home had previous flood damage or is located on a plain of flood.
If you see nothing in the flood damage disclosures or need flood insurance, ask the real estate agent if they are aware of any previous flood damage.
Occasionally, there will be no information about previous flood damage from the disclosures or the real estate agent, but it will be discovered during the inspection process.
Again, the need for flood insurance is not necessarily a deal breaker, nor does it mean that the home is likely to flood again ; however, carrying flood insurance on a home can be expensive, so knowing this information can change your mind about the once – perfect home in Dallas Texas.
WHY IS FLOOD INSURANCE REQUIRED?
Flood damage can be devastating for a property.
Depending on the extent of the damage, you may need some flood remediation services and minor flood replacement claims, or your entire home may need to be rebuilt in the event of a severe flood.
Because your lender has a financial stake in your mortgage–whether backed by the federal government or a private corporation–it is important to protect their investment. If your home is located in an area where flood damage could potentially occur, that means that at some point in your ownership you may have to make a costly claim.
Your lender requires flood insurance to help offset the cost of any claims that may arise in order to protect themselves from losing money on your home loan.
HOW MUCH FLOOD INSURANCE DO I NEED ON MY HOME IN Dallas Texas?
The amount of flood insurance is going to depend on whether or not you have a mortgage on your home.
If you are not borrowing money to pay for your home, either because you have been able to pay for it in advance or you have paid off your mortgage, it is recommended that you carry flood insurance equal to the value of your home and the property within it.
Flood insurance isn’t required in this situation, but it is highly recommended for your financial protection.
You must have flood insurance equal to the cost of property development or the maximum coverage for those who have a mortgage, whether federally backed or private. The development cost of the property includes the reconstruction of your home if it is destroyed. Your insurance company’s underwriter will determine this amount based on what materials your home is made of, as well as the cost of goods and services in Dallas Texas.
It depends on whether you purchase federal or private insurance for floods. Federal insurance is usually limited to $ 250,000 for the structure and $ 100,000 for personal property, while private carriers may have much higher limits
