Hey, everyone! Getting insurance for your newly purchased home is not as easy a venture as it used to be. There are still many insurance carriers, but the cost has definitely gone up and certain areas are being penalized depending on its location within the apparently updated maps showing high fire areas and also the flood zones.
This absolutely affects qualifying to purchase and also your payment per month. Before you put an offer on a property, your lender should give you an estimate of what your qualifying range is, your esimated payment per month, and your estimated closing costs to obtain your loan to purchase. The lender will do their best to guess the insurance cost-- and you will be paying for your first year upfront as part of your closing costs-- and so with these new, higher insurance rates-- we are all getting thrown for a loop and scrambling to get an idea of the new insurance rates on properties. I will update you when I see some sound numbers and get a good idea of how much it's changed. For now, I am just seeing a home's rate change here and there, and can say it's definitely gone up, not down!!
Here's another bit of fun-- flood insurance. Get ready to make sure there is a flood elevation certificate so the lender and insurance company can see the elevation of the insurable buildings vs the 100 year flood zone elevation. Good news is that some properties can see a dramatic reduction in the flood insurance premium by getting this certificate. Bad news is that it's another $400 and up cost to every escrow with insurable buildings and a buyer getting a regular loan (private money loans may not require this but talking about private money loans is a whole other discussion I shall have later!). If you already have a flood elevation certificate on your property, keep it!! They are not automatically filed with the county or government agency and if you lose the paperwork (some bank owned properties may have had them done in the past but the paperwork is gone, etc) then you may have to get it done again! At the end of the day, flood insurance premiums have gone up, too, so even with a reduction in premium for a certificate showing the house isn't as badly in the flood zone as first thought, it will still cost more than it used to...
