Insurance for Homes

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...

Underwriters and Water

Okay, so I am starting to see a trend towards getting really picky about wells and developed springs...  and even small water districts, too when it comes to loan conditions.  Recently there was a small water district whose name had Spring in it...  and once the underwriter saw that, they started asking lots and lots of questions.  Now we have done one water test and although there's NO fecal coliform, there is some plant bacteria-- so the underwriter is requiring we get a chlorination system installed...  and I expect to have to do another water test after installation, too.  

Here's my concern.  SO many properties in my area are on wells, shared wells, small water districts, and developed springs...  so are we now looking at production tests and water quality tests for all?  That will add a significant cost to the escrow and transaction...  who will pay for it?  Are we having to think of requesting the sellers to pay for it when writing the purchase offer?  And how much is enough information for the underwriters?

I sincerely hope that the underwriters stop pushing in every direction with more and more conditions, because they will simply begin making it impossible for a buyer to get a loan.  Reasonable requests, yes!  But waiting until all other conditions are cleared and THEN putting forth new questions and conditions has been throwing a curveball into our escrows and jeapordizing timeframes and transactions right and left.  It's stressful enough for a buyer to purchase today!!  They don't need these added surprises, too...