Flood Insurance and HELOC

3 Replies

I've came across a very motivated seller for a house that is considered to be in the flood plane.

From what I understand, If I own the house outright without a mortgage, I do not need flood insurance. According to the owner and neighbors, this property and surrounding properties haven't flooded since the 1930's. 

My question is: If I buy this house cash and want to pull some of the cash back out, what's the best way to do this? I've been told possibly a HELOC, but if I do that will I then need flood insurance?

I'm sure this is different by each individual case and state but looking for any advice. Thank you.

If your property is identified as being in the revised flood plain obtaining any loan from any federally insured lender will require flood insurance.

Go to the lender you intend to use and inquire! If it is in a flood plain, you can obtain a "Spot Elevation" from a surveyor, if the improvements are high enough to be out of the flood plain you can avoid the insurance. A Spot Elevation might cost a couple hundred buck, well worth it in some areas. Good luck :)

@Ryan Church  I have bought a few deals in flood zones with owner financing around me in the central valley.  Traditional buyers often times steer away from flood zone properties because of the costly insurance.   This is more of note that we should be looking at free and clear flood properties and get sellers to carry....  I think there is a lot of opportunities.

Frank R

Flood insurance premiums can be lowered with mitigation. I have a whole article about it.

https://www.biggerpockets.com/forums/61/topics/364937-reducing-flood-insurance-costs?page=1#p2316931

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