February 16, 2024
Buying a Home in a Higher-Risk Flood Zone: What to Know
If you're looking to purchase a home, it may concern you to learn that significant numbers of homes are located in medium- or high-risk flood zones. Specifically, a recent study revealed that almost 41 million Americans might be living in 100-year flood zones — areas with a one percent chance of flooding in any given year. While it's prudent to be cautious up-front, buying in a riskier flood zone could turn out to be a good opportunity in today’s competitive housing market. If you're a prospective homeowner, here's what you need to know about buying a home in a moderate or high-risk flood zone.
What Is A Flood Zone?
Let’s have a quick look at what flood zones are considered to be. Everyone lives in a flood zone of some kind — it just depends on whether the flood risk is low, high, or medium, according to the Federal Emergency Management Agency (FEMA), which is responsible for the National Flood Hazard Layer and Flood Insurance Rate Map. Moderate- to low-risk areas have B, C, or X designations on FEMA flood maps, and high-risk flood areas have designations beginning with A or V.
How do you know if your current home or one you're thinking of buying is located in a riskier flood zone? Fortunately, the FEMA Flood Map Service Center has an easy online tool that lets you find the flood zone that applies to your property just by inputting the address.
Potential Advantages Of Purchasing A Home In A Higher-Risk Flood Zone
Purchasing a home in a flood zone with a riskier designation can be a winning deal for prospective homeowners. Below we'll look at the potential advantages.
Homes in riskier flood zones are often priced lower compared to homes in areas that are less prone to flood risk, meaning you can afford a home that might otherwise be out of your price range. And with savings, you might realize you can invest in flood protection or other home improvements.
Many homes in higher-risk flood zones are located near water bodies like ponds, lakes, and rivers. These settings offer stunning views along with tranquility, privacy, and access to nature, adding to the home's desirability.
It's possible that the current owners of homes in riskier flood zones have already made significant waterproofing upgrades to their properties, including installing flood-resistant materials, raising the home, or improving the drainage system. This means flood protection investments have already been made for you — saving you money and providing assurance that your new home is protected from damages related to flooding events.
Increased Outdoor Opportunities
Because homes in riskier flood zones are often located near water bodies, as we discussed above, making your new home in one could give you easy access to water-oriented recreational activities like fishing, boating, and kayaking. These homes may also be close to hiking trails and parks that provide plenty of opportunity for passive recreation like birdwatching and active recreation like hiking. Owning a home in a higher-risk flood zone could mean having unique recreational possibilities right on your doorstep.
Risks Of Purchasing A Home In A Higher-Risk Flood Zone
While buying a home in a more risky flood zone comes with potential upsides, it comes with the obvious downside of more possibility of flooding, including from rising sea levels and future property development in the area — along with the disadvantages of potential difficulties selling the property and the cost of flood insurance.
Rising Sea Levels
Climate change has resulted in rising sea levels, which can increase the risk of flooding for your home. This means that even if your property hasn't experienced flooding in the past, the chances of it happening in the future may increase.
Construction of homes, commercial developments, roads, and parking lots puts strain on drainage systems and can easily lead to increased risk of flooding. No matter what type of flood zone a home is located in, building that occurs after you move in can put you at greater risk of experiencing flooding and flood damage.
When a house floods, it's often difficult to determine how much can be salvaged. Extensive damage can be costly to repair, and in some cases, it may not be possible to restore the home to its original condition. This can significantly impact your investment and overall satisfaction with the property.
Owning a home in a riskier flood zone also poses potential resale challenges. Buyers may well be wary of purchasing within a medium- or high-risk flood zone or taking on a house with a history of flooding. And, just as you may have gotten a bargain in buying the house because it was in a flood zone, your selling price may be compromised.
Finally, flood insurance costs and potential difficulty in getting claims paid can be deterrents for prospective buyers.
By being well-informed and taking the necessary precautions, though, you can potentially find a home that meets your needs while balancing the risks and benefits. It's crucial to weigh the pros and cons, consult with experts, and ensure you're prepared to handle the challenges of living in a higher-risk flood zone before making a purchase.
Determining What Type of Flood Zone Your Home Is In
According to FEMA, if you want to know what type of flood zone a home you're currently living in or thinking of buying is in, there are a few ways to find out. As we discussed above, one of the easiest ways is to visit the FEMA's Flood Map Service Center website. By entering an address, you can access detailed flood maps that show the flood risk in an area.
Another option is to contact your local government planning department, as it is highly likely to have additional resources and information about flood zones in your community. Don't forget to ask your real estate agent or the property seller for any information they might have about a home's flood history or risk.
Is Flood Insurance Required If You Live In A Higher-Risk Flood Zone?
When you live in a higher-risk flood zone, flood insurance is often a necessity. If you have a federally backed mortgage, you'll be required to have flood insurance to protect your (and potentially the government's) investment.
Even if you don't have a federally backed mortgage, it's still a smart idea to consider getting coverage. The National Flood Insurance Program (NFIP) provides affordable flood insurance to those living in high-risk areas. As long as your community participates in the NFIP, you can purchase federal flood insurance regardless of your location. Don't overlook the importance of having flood insurance — it could save you a lot of money and stress in the long run.
Does Homeowners Insurance Cover Flooding?
A common misconception among homeowners is that their standard insurance policy will cover flood damage. Unfortunately, this is not the case. While many home insurance policies cover various types of water damage, they typically don't include coverage for floods. Given that just an inch of water can lead to thousands of dollars in damages, it's crucial to have separate flood insurance if you live in a high-risk area. By having flood insurance, you can ensure that your home is protected and avoid serious financial stress in the event of a flood.
Flood Insurance Basics
If you're considering buying a home in a higher-risk flood zone, understanding the basics of flood insurance is essential. Flood insurance covers damages caused by rising water, such as heavy rainfall or storm surges, which are not covered by standard homeowners' insurance. Typical coverage includes structural damage to your home, personal belongings, and additional living expenses if you're forced to temporarily relocate during repairs.
The average cost of flood insurance varies depending on factors like your home's location, elevation, and the specific coverage limits you choose. Keep in mind that even if you aren't required to have flood insurance, it's still a smart decision to invest in a policy. Many homeowners who aren't mandated to carry flood insurance choose not to and later regret it when their home is damaged by a flood, leaving them with no coverage and a hefty repair bill.
Flood insurance is crucial protection for homeowners in flood-prone areas. Make sure to thoroughly research the coverage options available to you. Also, consider the cost of insurance in your home-buying budget to avoid potential financial stress in the future.
How To Get A Mortgage For A Home In A Higher-Risk Flood Zone
Buying a home in a riskier flood zone comes with unique challenges, including obtaining a mortgage. Below is a step-by-step guide to help you understand the process involved in getting a mortgage for one of these homes.
Compare interest rates from various lenders to find the most competitive rate for your mortgage.
Before you start looking for a house, obtain a mortgage pre-approval to establish your budget and show sellers that you're a serious buyer.
Most federally backed mortgages require flood insurance for properties in high-risk flood zones. Ensure your policy meets your lender's minimum coverage requirements.
Include flood insurance premiums in your overall housing expenses, as they can be costly, especially in high-risk areas.
Lenders may require additional inspections or certifications, such as a flood elevation certificate, for homes in riskier flood zones. Be ready for these extra steps and potential property modifications to meet flood zone requirements.
With the above steps completed, proceed with your mortgage application, providing documentation like proof of income, credit history, and flood insurance policy.
By following these steps and collaborating with your lender, you can successfully obtain a mortgage for a home in a higher-risk flood zone.
Ways To Protect Your Property From Flooding
While floods often can't be avoided, as a homeowner, there are steps you can take to safeguard your property and minimize damage. Below we'll discuss four home improvements to consider for better flood protection.
Elevate Your Home
If you live in a high-risk flood zone, raising your house above the base flood elevation can significantly reduce the risk of flood damage. Consult with a professional contractor to assess the feasibility of this option for your property.
Install Flood Vents
Properly installed flood vents in your home's foundation can allow floodwaters to flow through, reducing pressure on the walls and minimizing structural damage. Be sure to follow local building codes and consult with a professional for proper installation.
Create A Rain Garden Or Swale
Landscaping features like rain gardens or swales can help manage stormwater runoff by slowing down and absorbing water. This reduces the chances of flooding near your home and helps protect local waterways from pollution.
Waterproof Your Home
Seal your home's foundation, walls, and basement to prevent water intrusion. Waterproof coatings and sealants can be applied to walls, floors, and cracks to reduce moisture penetration. Additionally, consider installing a sump pump in your basement to remove water in case of flooding.
By implementing these home improvements, you can protect your property and minimize potential damage. Remember that regular maintenance and inspection of your home's drainage systems, gutters, and roof can also play a crucial role in flood prevention.
Learn More About Foundation Challenges
Buying a home in a higher-risk flood zone might initially seem inadvisable, but you should give it a second thought before dismissing the idea. With proper research, preparation, and collaboration with a knowledgeable realtor, you can find valuable properties in riskier flood zones that offer unique advantages such as stunning views or unbeatable prices. By understanding the risks and taking appropriate measures to protect your property from flooding, you can turn your dream home into a safe and enjoyable living space. So, keep an open mind and give higher-risk flood zone homes the consideration they deserve — you might be pleasantly surprised by what you discover.
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