DIYbanter - View Single Post - How would I get a mortgage over the amount covered by flood insurance?

Joshua Putnam

In article .com,
says...

Let's say the replacement value of the house is above $250,000 for
arguments sake.

My question is how would a bank allow the mortgage since the
replacement value of the house is less than the coverage amount of
$250,000 as specified by FEMA? Would their be risk to the bank that
the house washes away and presents a deficit?

Your insurance agent faxes in proof of insurance stating that your home
is insured to the maximum available under NFIP. The lender usually
accepts that because they know NFIP won't write higher limits.

Your homeowners insurance will still be required to cover you for,
typically, the full replacement value of the home, or the balance of the
loan. But flood insurance is a different animal entirely thanks to
NFIP.

There has been talk, again, of increasing the maximum dwelling coverage
available under NFIP, now that many homes are well above $250,000
replacement cost. But the budgetary impact would be significant unless
there's a rate increase to go along with it.

--
is Joshua Putnam
http://www.phred.org/~josh/
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