Mortgage brokers are often an essential piece of the homebuying puzzle. Buyers rely heavily on brokers to guide them through the mortgage process, using their expertise to find the most desirable loan products, and assist with extensive applications and paperwork. There are several elements a broker may want to consider in order to facilitate a smooth transaction, and one of these is the potential need for flood insurance.
Home buyers may be required to purchase flood insurance if they are purchasing property inside of a high-risk area and their mortgage is provided by a federally backed or insured financial institution. This condition may come as a shock to some home buyers and has the potential to delay their closing. Brokers can get ahead in this process, by familiarizing themselves with the flood insurance options available to home buyers and being prepared to explain them to their clients when necessary.
Many brokers or mortgage loan officers may be unaware that there are alternatives to the government-run National Flood Insurance Program (NFIP). While at one time this was the only means available for purchasing flood insurance, the private market has gained considerable ground in the marketplace and can often provide more cost-effective policies with additional benefits not offered by the NFIP.
The NFIP relies heavily on flood maps to assign rates. The maps are often outdated and do not account for an individual property’s true flood potential which can result in unnecessarily high premiums for some. Private insurers, on the other hand, often use technological advancements to better define a specific property’s risk of flooding and keep rates in line with its actual flood potential.
Upon looking into private flood insurance, mortgage brokers will find that private policies frequently extend higher coverage limits, may not require costly elevation certificates, and are often tied to providers with excellent claims and customer service.
In addition to these benefits, some private companies offer a quick and simple online process for obtaining a flood insurance policy. Since time is often of the essence during real estate transactions, advantages like this can help keep a deal on schedule. Brokers should also consider forming a relationship with a trusted flood insurance specialist and keeping their number handy. A private flood insurance specialist can provide valuable advice and help clients find the coverage that suits their needs.
As prospective homeowners are hitting the housing market and reaching out to mortgage brokers or loan officers for assistance, brokers who educate themselves on the ins and outs of private flood insurance – and who build relationships with a trusted private flood insurance specialist – will standout, demonstrating the competence and care that both new and current clients will appreciate.
