With rising home prices and historically low mortgage rates in Jacksonville, FL, refinancing tends to be a very attractive option for homeowners to either lower their outstanding property debt or to pull out equity to make big changes and repairs on the home. However, the refinancing process has changed significantly since the 2000’s, and a number of new rules have been put in place since the 2009 real estate recession. One of those rules has to do with flood zone areas and flood insurance, according to Connect America Insurance Agency.
Typically, a financed home in Jacksonville FL has to have some kind of homeowners insurance plan in place to protect it. This ensures that the lender’s collateral, the home, is protected and remains valuable in case the home loan can’t be paid back (the lender would then foreclose on the home and sell it to recover the debt). In flood zones, however, general homeowner insurance does not protect a home. A homeowner has to obtain a special flood insurance policy coverage from the National Flood Insurance Plan (NFIP). For a refinance lender, this is a critical protection, especially in areas that the Federal Emergency Management Agency (FEMA) has designated risk areas for flooding.
As a result, those refinancing or going to find that while they may be able to avoid an escrow account requirement for property taxes, they may have to pay an escrow for flood insurance on top of their regular mortgage payment. This type of issue doesn’t appear or become known until the applicant is getting ready to sign the final paperwork on the refinance. To understand how this sort of issue works and get more details on flood insurance, in particular, the folks at Connect America Insurance Agency can help. Email or call today!