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Started By
Message
Buying Home - Potential Flood Insurance Worries
Posted on 2/12/14 at 5:31 pm
Posted on 2/12/14 at 5:31 pm
First off, I'm ignorant on the topic of flood insurance. I grew up on a mountain... what do you expect?
I'm wanting to purchase a home in New Orleans, but I'm extremely concerned about the potential of massive flood insurance rate hikes coming down the pike. I know the details and maps have yet to be finalized, but it doesn't appear that Congress has any intention to delay the changes.
In my research, I read horror stories of the potential for 5-10k + annual flood insurance rates. I can't financially justify that amount of insurance on a 200k home. The last thing I want is to purchase a home and be totally blindsided, and then get locked in to a situation that I can't get out of or have to let the house and equity go.
A few questions:
Am I being a chicken little with my alarmism? I don't want to make decisions based on fear, but facts.
Do these rate hikes have the potential to totally derail the NOLA metro housing market? Prices are at all-time highs and rates of this magnitude would put home ownership out of reach for most people.
Do you think buying can still be a good idea, under certain conditions? I.E., purchasing a house that is currently in a X Flood Zone on both the previous and updated maps.
I truly appreciate any responses. I'm trying to do my due diligence on the subject, but I'm having a difficult time finding concrete facts and certainties on this subject.
I'm wanting to purchase a home in New Orleans, but I'm extremely concerned about the potential of massive flood insurance rate hikes coming down the pike. I know the details and maps have yet to be finalized, but it doesn't appear that Congress has any intention to delay the changes.
In my research, I read horror stories of the potential for 5-10k + annual flood insurance rates. I can't financially justify that amount of insurance on a 200k home. The last thing I want is to purchase a home and be totally blindsided, and then get locked in to a situation that I can't get out of or have to let the house and equity go.
A few questions:
Am I being a chicken little with my alarmism? I don't want to make decisions based on fear, but facts.
Do these rate hikes have the potential to totally derail the NOLA metro housing market? Prices are at all-time highs and rates of this magnitude would put home ownership out of reach for most people.
Do you think buying can still be a good idea, under certain conditions? I.E., purchasing a house that is currently in a X Flood Zone on both the previous and updated maps.
I truly appreciate any responses. I'm trying to do my due diligence on the subject, but I'm having a difficult time finding concrete facts and certainties on this subject.
2
Posted on 2/12/14 at 5:42 pm to OldHickory
When the maps change in the future they are getting better for the most part within the protective levee system. Check to see If the flood quote is reasonable now (make sure it is quoted using a flood elevation) and then ask the insurance agent what the future map will be at that location. The new maps (not in affect yet) can be found at riskmap6.com
Doing this should take out most uncertainty out about current and future prices.
Doing this should take out most uncertainty out about current and future prices.
Posted on 2/12/14 at 7:28 pm to Buck Dancer
quote:
NOLAGreg
quote:
When the maps change in the future they are getting better for the most part within the protective levee system. Check to see If the flood quote is reasonable now (make sure it is quoted using a flood elevation) and then ask the insurance agent what the future map will be at that location. The new maps (not in affect yet) can be found at riskmap6.com Doing this should take out most uncertainty out about current and future prices.
FedGov will soon stop subsidizing the National Flood Insurance Program (NFIP). Once this happens, look for 20-25% across the board rate hikes. Before the insurance agents jump me, I'll admit I know little about the insurance industry.
But I know the folks who are heavily involved. It's gonna happen. Be very careful with flood policies. Also don't trust a "projected" elevation certificate as these are often done by friendly engineers when developers on new properties want to save money on temporary flood policies.
Posted on 2/12/14 at 7:52 pm to OldHickory
Let me answer some of these questions.
All properties in A, V, or AE zones will require a elevation certificate. If you're buying a property ask for the elevation certificate.
Now if it is in a X or B zone it won't need one. So if someone tells you they don't have one, don't be alarmed. Just call any agent that does flood insurance and ask for them to run an elevation determination. They should be able what zone it is in from that.
If you would buy a house in a current X zone, I'd say you'd be 85% fine. I just can't guarantee that it will remain that way because no one really knows. Most likely the land hasn't changed too much to make significant changes in the flood zones.
Major rate hikes are occurring for those who have flooded multiple times, are below base flood elevation, or those who are located outside levee systems. If you're high risk you're going to pay a high premium.
Flood is doing away with what was called pre-firm rates. Pre-firm means rates giving to an area before flood zoning. In the NOLA area flood zones weren't established until 1974, so everything prior to that was rated generically. Now FEMA wants specifics to rate each house, which is why they are demanding elevation certificates. Pre-firm policies are the ones that will see steep rate hikes.
My suggestion, look around. If it's on a slab in NOLA be wary. If it's raised it'll more than likely be okay.
If you were building a house I'd tell you that the target is 3 feet above based flood elevation. A real sweet spot for flood insurance, around 400-600 a year for max coverage (250k dwelling 100k contents). If it's 1 foot than base flood or higher you're going to be fine.
All properties in A, V, or AE zones will require a elevation certificate. If you're buying a property ask for the elevation certificate.
Now if it is in a X or B zone it won't need one. So if someone tells you they don't have one, don't be alarmed. Just call any agent that does flood insurance and ask for them to run an elevation determination. They should be able what zone it is in from that.
If you would buy a house in a current X zone, I'd say you'd be 85% fine. I just can't guarantee that it will remain that way because no one really knows. Most likely the land hasn't changed too much to make significant changes in the flood zones.
Major rate hikes are occurring for those who have flooded multiple times, are below base flood elevation, or those who are located outside levee systems. If you're high risk you're going to pay a high premium.
Flood is doing away with what was called pre-firm rates. Pre-firm means rates giving to an area before flood zoning. In the NOLA area flood zones weren't established until 1974, so everything prior to that was rated generically. Now FEMA wants specifics to rate each house, which is why they are demanding elevation certificates. Pre-firm policies are the ones that will see steep rate hikes.
My suggestion, look around. If it's on a slab in NOLA be wary. If it's raised it'll more than likely be okay.
If you were building a house I'd tell you that the target is 3 feet above based flood elevation. A real sweet spot for flood insurance, around 400-600 a year for max coverage (250k dwelling 100k contents). If it's 1 foot than base flood or higher you're going to be fine.
Posted on 2/12/14 at 8:01 pm to krange1
Also just because its behind or in a levee system may not mean that it is protected. FEMA has only added levees onto their maps if they are up to or higher than the 100 yr flood elevation.
If its not a federally certified levee they treat it as if it is not there. That simple fact has been a huge sticking point about the maps in coastal areas.
If its not a federally certified levee they treat it as if it is not there. That simple fact has been a huge sticking point about the maps in coastal areas.
Posted on 2/12/14 at 8:06 pm to krange1
So a 1 or 2 ft. raised home in a current zone X, BFE of 2 or 3 should be just fine, correct?
Another potential scenario would be the same raised home, zone AE, BFE of 7. This one concerns me more just because of the AE.
Thanks to all of you for your very informative posts.
Another potential scenario would be the same raised home, zone AE, BFE of 7. This one concerns me more just because of the AE.
Thanks to all of you for your very informative posts.
Posted on 2/12/14 at 8:14 pm to OldHickory
In a X zone. Your elevation doesn't matter.
Being above base flood matters when its a flood zone like A or AE.
Being above base flood matters when its a flood zone like A or AE.
Posted on 2/12/14 at 8:21 pm to krange1
You've provided a lot of clarity on a complex subject. It's very much appreciated.
Posted on 2/12/14 at 8:22 pm to OldHickory
Not a problem. I work in the field, I'm hoping I can provide that much.
Posted on 2/12/14 at 11:30 pm to GFunk
quote:
FedGov will soon stop subsidizing the National Flood Insurance Program (NFIP)
Its highly unlikely. Highly
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