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Saving Money On Your Dream Home’s Flood Insurance

Breaking ground on your dream home’s construction might rank up there with some of the most memorable moments in your life. Making sure this moment doesn’t cost a cent more than it has to, however, can be vital. Flood insurance is one area that can tack on a fair amount to your bottom line, but there are ways to cut its costs out of the picture entirely if you plan carefully. If you must have it, there are steps you can take to keep the pricing as low as possible. When you select and purchase your own land to build on, you will have control over the need for flood insurance. If you take things a step further and act as the owner builder on your property, you’ll be able to save in other areas of construction should flood insurance be required no matter what you do. Selecting Your Land With Flood Insurance In Mind Flood insurance isn’t technically required by the terms of a mortgage agreement on every parcel of land in the United States. Generally, the need to have flood insurance is determined by a parcel’s location on Federal Emergency Management Agency flood maps. These maps are created state by state and county by county to show the areas that are more prone to flooding than others. When a property falls within a flood zone, lenders will require flood insurance. The typical rule of thumb when you’re looking at property is to see if it is located near: • The ocean • A lake • A pond • A river or stream Waterfront property will almost always require flood insurance. Property within the flood plain, however, can be a little deceiving. A home might appear to be high and dry and far enough away from a water source, but history might show it’s subject to flooding. The best way to be certain about a particular parcel is to look it up on the flood maps. If you don’t want to pay for flood insurance during construction and after it, you will want to make sure lots you are considering fall well outside the flood plain in your area. Selecting Land To Avoid Flood Insurance Requirements If you don’t have your land in place for constructing your dream home, you are in the driver’s seat on whether this expense has to be a part of your future or not. If you’re concerned about making an extra monthly or annual payment, select your property with care and do reference flood maps for your area. It is possible you can have your cake and eat it, too, if you pay attention to the maps. For example, you can purchase a sizeable parcel and place your home outside of a flood zone. Your property might have a stream or pond on it, but the structure could conceivably fall outside the zone – if you situate it correctly on the land. In most areas, flood insurance is a fairly reasonable expense, however. If it’s your dream to have a house on a lake, don’t let this extra requirement scare you off. Just examine your options and your budget and then proceed accordingly. A Case For Flood Insurance Even if your property doesn’t fall within a flood plain, it is sometimes a very wise idea to purchase flood insurance. Most homeowner’s insurance policies do not cover floods at all. This means if by some fluke your property does flood, you could be left out in the cold paying for damages yourself. Even if your mortgage company didn’t demand the purchase of a policy, it will be your problem to pay for necessary replacements and repairs without the coverage. While it is unlikely that flooding will occur in property that is high and dry, it can happen. With this in mind, it’s a good idea to consider coverage regardless. In areas outside flood plains, this coverage is generally very minor in pricing. A little extra in escrow each month can deliver peace of mind, which many homeowners find is worth the expense. When To Buy Flood Insurance The timing on making a purchase of flood insurance can be critical for following the guidelines of your loan and also ensuring property is well protected. While it might seem silly to purchase a flood insurance policy on a home that isn’t even built yet, the best recommendations call for having this coverage in place before the first materials shipment arrives for construction. To be certain you purchase flood insurance when you’re supposed to, check with your mortgage lender. Some require coverage prior to closing on a loan. Others, however, are more flexible on this front. It does pay to check and be 100 percent certain. Saving Money On Coverage Flood insurance can be a difficult buy in some areas of the country. The hurricane torn Gulf Coast, for example, has had issues with insurers pulling out. Still, there are ways you can get the coverage you need without necessarily paying through the nose for it. To make sure you’re getting the best buy, make sure to: • Obtain multiple quotes – It’s never a good idea to settle for the first price quoted on anything. Shop around for your coverage and you might find flood insurance can be had for a very small annual fee. • Check into company backgrounds – Insurance companies should be vetted for their licensing to operate within a state. It’s also a very good idea to check into the payment record of a company. Flood insurance is an area you can cut corners on in some cases to save money on new home construction. If you want to properly protect your dream home during building and after, however, it is smart to carefully consider options and weigh the expenses involved in having this type of coverage in place. It doesn’t make sense to pour your heart and soul into building your dream home to have it all wash away in the blink of an eye.