Before you buy a Spring Texas home located in the 100 year flood zone, you need to stop and consider the rising cost of flood insurance. In 2009, flood insurance on Spring Texas homes located in the 100 year flood zone averaged a 6% increase and in 2010, they increased an additional 8%. Now, don’t confuse home owners or hazard insurance with flood insurance because flood insurance is a completely separate insurance policy.
If your Spring Texas home is located in the 100 year flood zone and you have a mortgage on the home, you are stuck with purchasing flood insurance because it is required by your mortgage lender. If your home is located in the 500 year flood zone, flood insurance is not required by your mortgage lender and the purchase of flood insurance is totally optional.
Will the rising costs of flood insurance stop buyers from purchasing homes in the 100 year flood zone? Probably not.
But if you are thinking about purchasing a home in the 100 year flood zone, you need to do your math. What I mean is let’s say your flood insurance policy is going to cost you $600 a year which is $50 a month. How much more house could you buy for the same $50 a month if you were not required to purchase flood insurance? Based upon today’s mortgage interest rates of 5%, the answer is about $10,000.
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