Besides additional costs for flood insurance going up, the FEMA maps have greatly expanded the area that are consider in a flood plain. On the mortgage side of a real estate transaction, we are constantly running into these surprises.
We were recently doing a mortgage for a client buying a $440,000 house, the client was putting 20% down. When the appraisal was being done the appraiser indicated that the property was partially in a flood zone. Which meant the buyer would need to have flood insurance.
It turns out that the sellers never knew anything about being in a flood zone or that they required flood insurance. As they were not in a flood zone at the time they purchased the property. The transaction almost fell apart, as the buyer wanted a discount on the purchase price as it was not disclosed that the property was now in a flood zone. The sellers finally discount the price by $10,000.
It was clear that the seller was not attempting to misrepresent this issue, as the maps changed since these sellers originally purchased the property.
These flood maps have been greatly expanded, so always ask and verify the information if you have the slightest concern.
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By: Lew Sichelman
"Homeowners will see increases in the rates they pay for flood insurance soon, if they haven't already, with owners of vacation homes seeing the biggest jump. But flood insurance is still one of the best deals going for them."