In 2004 FEMA started to finally update flood maps do to the discovery of several areas not properly covered during previous years flood events. This is an ongoing process and in some cases homeowners are not aware their home has been designated a high flood risk area and may require flood insurance. The process is not very scientific and mistakes are made.
Any time you have a mortgage on property in a SFHA (Special Flood Hazard Area), the lender will usually require you have flood insurance, which can be pricey. The issue is that you may not even realized it until you go to sell your house. You get a buyer and all the sudden the buyer walks because he was told he needs flood insurance by his lender.
We just had this come up with one our listings and the seller found out from a neighbor who just sold their house that the whole street end overlooking a small creek was now in a SFHA. Of course they look down the hill at the creek, so flooding has never been and issue. But now they will have to address it due to disclosure laws.
You might want to do a quick check if you have any doubts on FEMA’s web site here.
Oh oh! Found out the bad news? Now you can try and get a Letter of Map Amendment (LOMA) that exempts your property. But guess what, you are going to have to pay for it. More details here on FEMA’s site. Not all homes will be able to get one so you’ll be stuck with the higher rates.
Best not wait till it’s time to sell your home. Just the insurance costs will deter some buyers, not the mention that they may think you’ve had flooding problems before. Sometimes the random power of the government will bite you when you least expect it.
The Federal Government has continued to extended the subsidy on flood insurance for a few more years but plans to slowly implement increases. You might want to check this out while you still have time if your home is anywhere near a creek or major drainage ditch. And be sure and check any property before your purchase so you won’t have any surprises later.