The Top Five Special Flood Hazard Area Counties

If you are buying a home in certain U.S. states there is an extra factor to consider — other than if your ideal home hasl amenities like a backyard that’s great for barbecues, or a chef-ready kitchen. Especially if your home is near water, you’ll want to find out if your potential dream house is located in a flood hazard area county. If it is, then what does that mean? There are special purchase requirements for a home in a flood hazard area, and factors to keep in mind for the future. We’ve outlined a few basics to get you started, so you know what to look for when buying a home

What is a special Flood Hazard Area?

According to FEMA, 13 million homeowners live in the high-risk 100-year flood plain, which means they face a 1% chance of flooding during any given year. You’re in a high-risk flood zone, or Special Flood Hazard Area (SFHA), if your flood zone on FEMA’s map has a code starting with A or V. (This also is referred to as the “base flood” or “100-year flood.”) You’re at moderate flood risk (having a 0.2 percent annual chance of flooding) in Zone B or shaded Zone X. If you live in an area of minimal flooding, you’ll fall in Zone C or unshaded Zone X. You can look up your flood zone by address via FEMA’s Flood Map Service Center. It’s likely that the homeowner for your potential new house will share this information upfront, but it’s a good idea to do your own research.

Flood Hazard counties

According to the Pew Trust, in a report about flooding and the risk to public schools, five of the most at risk flood zone areas in the United States are Monroe County, Florida; Hyde County, North Carolina; Cameron Parish, Louisiana; Poquoson City, Virginia; and Tyrrell County, North Carolina. However, California, Texas, and New Jersey also have counties that are at risk, and your best bet is to consult the FEMA flood map.

What are the purchase requirements?

If your new home has a special flood risk, you’ll be paying for flood insurance on top of your regular homeowners policy. Under federal law, people with homes in high-risk areas with mortgages from federally insured or regulated lenders (this includes most nationally-known financial institutions) must have flood insurance. However, lenders can, at their discretion, require flood insurance for mortgages on homes located in low- to moderate risk areas. The average homeowners flood insurance premium under the program is approximately $700 a year.

What do I need to know after I’ve decided to buy?

Keep in mind that just because your home is at risk, doesn’t mean that it will flood while you are living there. However, it is still a risk, and you can ask a seller to help foot the bill for the added insurance costs that come with buying a house in a flood zone area. It’s not uncommon for sellers to offer buyers a one- to two-year home warranty to cover unexpected issues that may arise with the home’s main systems and components. Similarly, a seller could offer to discount a buyer’s flood insurance costs for a year as an incentive to purchase the property, either through an adjustment to the purchase price or credit at closing.

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What to Do Before Applying for a Mortgage

Buying a home is a momentous occasion for most people. However, doing so almost always requires a mortgage. Applying for a mortgage loan and having your application approved is often more stressful and challenging than the home buying process itself. With that said, being prepared for what’s in store can put you in a position where these difficulties are minimized.

Consider the following before deciding to apply for a mortgage:

Compare lenders

It’s important to do your homework regarding various lenders. Application requirements, interest rates, loan type, and approval parameters vary from one lender to another. Consider using a web capture tool to document this information as you come across it online. Once you’ve given all the potential options a look, consult these captures to compare notes. Viewing the differences side-by-side will make it easier to determine which lenders are the best choice for your situation.

Improve your credit score

Once you’ve narrowed down the list of best mortgage options available, it’s time to devise a six-month gameplan for getting yourself into the best financial position possible for approval. This almost always requires an effort to improve your credit score. Do so by taking steps to rein in your credit utilization while continuing to demonstrate responsible credit usage. Check your credit report to spot errors that negatively affect your score and take steps to have them corrected. All of this should be done prior to your mortgage application.

Know the 28/36 rule

Most lenders rely on what’s known as the 28/36 rule when determining whether or not a mortgage applicant qualifies for loan approval. The mortgage payment must be no more than 28% of your gross monthly income, while your total debt obligations (including the mortgage payment) can’t exceed 36% of your gross monthly income. These include car payments, student loans, and credit cards. Do the math to determine whether or not your financial situation fits into these parameters before you decide to apply for a mortgage.

Gather the right documents

Lenders want to get to know as much about your financial situation as possible. This usually includes pay stubs, tax filings, and bank statements. While it varies from one lender to another, they typically want to see a month’s worth of paycheck stubs, two years of tax filings, and three months of bank statements. Have all this information readily available before applying.

Pay down debt

Chances are you’re at or over the 36% benchmark mentioned above. You want to lower that figure as much as possible before applying for a mortgage. The simplest way to do so is to pay off as much debt as possible. It’s easier said than done, but the truth is that a high volume of debt obligation will make it difficult to afford a monthly mortgage payment. It’s in your best interest to lower your monthly debt obligations as much as possible, in order to be in a better position to manage the financial situation being a homeowner will bring.

Don’t make any major purchases

Last but not least, you want to hold off on any major purchases before and after applying for a mortgage. In fact, it’s imperative to resist doing so even after you’ve been approved; lenders will continue to monitor your financial situation and have every right to rescind their agreement if they discover you’ve increased your debt obligation by racking up credit card debt.

Being approved for a mortgage is more difficult than ever before, but for good reason. Lenders need to make sure borrowers are in a position to fulfill their end of the arrangement. This requires a lot of paperwork and financial maneuvering, but the ends justify the means. Being prepared is key to being approved.

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Your Simple Guide to Payday Loans in Canada

What is a Payday Loan?

A payday loan is a short term loan used to cover immediate or unexpected expenses and is typically offered to people with a stable source of income. The idea is to get the loan as soon as you want it, before your payday, and pay it back on your next payday. Getting a loan for more than 30 days could depend on your arrangements with the payday lender. The amount to borrow also differs but the average payday loan in Canada is about $280, although you could request for up to $1,500. Failure to pay back this loan on the agreed date could result in more fees and interest charges that would increase your debt.

What to Expect When You Take a Payday Loan

Requirements

Before applying for a payday loan, ensure you meet the following requirements:

  • At least 18 years of age
  • A government-issued ID or a social security number
  • A stable source of income
  • An active bank account
  • A permanent address

Requests from the payday lender:

  • A form to allow the lender to withdraw the exact loan amount from your bank account, including fees and interests.
  • A post-dated cheque for the total loan amount.
  • An agreement from the lender that contains all the details for you to sign.

Are Payday Loans a Better Option?

There are a lot of arguments surrounding whether payday loans are safe or not. While advocates argue with the fact that it helps people with poor or no credit scores, others object with the fact that it traps people into debt. However, it depends on perspective and how the loan is being managed. 

A payday loan is meant to cover up for unexpected costs and not for things that can be avoided or kept for later. Payday loans are easier to access and have fewer requirements compared to bank loans and other kinds of loans. You also do not have to worry about your credit score and it is not in any way secured by personal property, so you can worry less about losing your property. 

To be on the safe side and ensure you don’t run into debt from taking payday loans, you can review the free financial education materials from the Canadian Payday Loan Association. Also, ensure you pay the loan off on the due date to avoid further costs. 

Risks of a Payday Loan

While payday loans are easier to get, the fees and interest rates are much higher than banks, credit unions, and credit cards. Exceeding the payment deadline would incur a higher rate, as the lender could add late fee charges and interest for the days post-deadline. The lender could also contact a collection agency, of which an action from them could affect your credit score. It could also lead to a court sitting.

Conclusion

While there are so many platforms and agencies available to lend you money, you have to be careful with the one you affiliate yourself with. A little mistake in your payday loans could keep you in unexpected debt. Accessing payday loans in Canada, for example, is an easy and fast way to go about it. While no platform can guarantee 100% security, signing up with the best-recommended ones would reduce security risks and save you from incurred debts. 

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