What is the lowest possible amount a mortgage company will allow you to insure a house for flood insurance?
Would it be the cost to replace the property or the amount of the loan? any one know about this?
What is the lowest possible amount a mortgage company will allow you to insure a house for flood insurance?
Would it be the cost to replace the property or the amount of the loan? any one know about this?
It is for the same amount as your fire insurance policy, up to the maximum amount of coverage insurable under FEMA rules. This coverage is based (or should be based) on the replacement cost of your home, but can be based on the amount of your mortgage loan if that is the lower. If your house is in a Flood Zone A or V, this flood insurance coverage is expensive and will cost you about twice as much as your fire/comprehensive policy. However, if you are in Flood Zones A or V (meaning there is a 1% possibility that the land will flood by 1 foot or more in any one year), then a bank granting or holding your loan is required by law to assure that this insurance is in place and they even have to check that every year. And that law has teeth in it. I think in many places it is a rip-off as it basically pays for the damage of the people with land below the water level in the Mississippi Valley and flood prone areas along seashores.
However, if your home is even slightly elevated on a mini hill (say 2 feet above street grade, then you have a good chance to have a licensensed civil engineer or surveyor survey the property and get the house out of the flood plain. That is done by FEMA with a Letter of Map Amendment (LOMA) and would eliminate the flood insurance requirement. The cost is about $500 to $1,000 to prepare the documentation and FEMA application and it takes about 2 months to get approved.