You found the home of your dreams only to find out it’s located in a flood zone. Are your dreams vanishing before your eyes? Would it be a huge mistake to move forward with the purchase? Keep reading to learn everything there is to know about buying a home in a flood zone.
Not All Flood Zones are Bad
First, let’s clear the air. Not all flood zones are bad. FEMA has several flood zone designations, each of which means something different. Some flood zones don’t carry many risks, but just the fact that they have a ‘flood zone determination’ makes many people run.
Typically, Flood Zones X and C carry minimal risk. You probably won’t be required to buy flood insurance for these zones. They either have a small chance of flooding or have had work done in the area to prevent flooding. Of course, things can change and structures can break. Carrying flood insurance even when you have minimal risk isn’t a bad idea.
Special Flood Hazard Areas, on the other hand, are risky. Zones A and V carry the highest risk. Your lender will likely require you to carry flood insurance in these zones. Yes, the insurance can be costly, but it protects you financially should you have a flood. Damages from a flood can cost thousands and thousands of dollars – you’ll be grateful for the coverage.
Flood Insurance can Get Expensive
Before you buy a home in a flood zone (especially Zone A or V) get quotes on the flood insurance. You may find that it’s only a few hundred dollars a year. But, you may also find that it costs thousands of dollars every year.
Your standard homeowner’s insurance doesn’t cover flood damage. This includes weather-related flooding and flooding from non-weather related occurrences. A clogged pipe or damaged sump pump could flood your home, even if you aren’t in a flood zone and the cost of repairs could fall on your shoulders.
Rates are federally-mandated, so you won’t find lower rates by shopping around. But, if you are eligible for specific discounts within a company, you may find that you save a little money.
Determining if the Home is in a Flood Zone
Sellers don’t have to disclose if their home is located in a flood zone in many states. While it would be generally nice to do so, it’s not always the case. Your mortgage lender, however, will determine the home’s flood status for you. If you are in a high-risk flood zone, the lender will require proof of flood insurance before you can close on the loan. You can also search the FEMA map yourself here.
Remember that flood zones can change, though. if you buy a home now that isn’t in a flood zone, it doesn’t mean it won’t be someday. Stay apprised of the changes to the land in the area and the ever-changing flood zone maps.
You can also ask the seller about the history of flooding in the home. You have a right to know the damages the home went through to help you make a decision.
The bottom line is that every home is subject to flooding, whether it’s in a flood zone or not. Granted, if the home is in a flood zone, such as Zone V, you have a higher chance of flooding (1% annual chance). But any home can flood. Find out how much flood insurance may cost for a home you have interest in to determine if the premium is affordable for you.