Say you’ve been shopping mortgage interest rates, and have been offered a deal you can’t pass up. So you filled out the loan application and submitted it for approval. While waiting to get the approval, the market fluctuates and interest rates go up and down. Wouldn’t it be nice to have a guarantee (or something close to it) that the deal-of-a-lifetime interest rate, that enticed you to go for the loan, will not change by the time your loan gets approved?

This is exactly what a mortgage rate lock, also called a mortgage lock-in or rate commitment, does; it locks in a certain interest rate and points for a specified amount of time, protecting you from market fluctuations and interest rate increases.

Therefore, as you shop rates among different lenders, don’t rely on the interest rate and terms the lender quotes, unless the lender is willing to offer a lock-in. A mortgage rate lock is the only guarantee that you will receive these terms at the time your loan is approved.

Get the mortgage rate lock-in writing!

Some lenders will only lock-in the interest rate, and not the terms or points associated, while others will lock-in the interest rate, points and terms. This is why it is crucial to ask for the rate commitment in writing, if possible. Not only will it prove to be useful should a dispute arise, but it will also allow you to fully understand how the lock-in commitment works. Some lenders may only offer a verbal commitment, which when it comes down to it, can be difficult to prove in the event of a dispute.

Also, it varies between lenders when they will lock-in an interest rate and points, it could be at the time you apply, during processing when the loan is approved

It’s that time of year, the rainy season. For many homeowners the rainy season also means the flood season. Do you have a flood insurance policy already in place? Be advised that even though you have homeowner’s insurance, it does not mean that you are covered in the occurrence of a flood. How do you know if you need flood insurance? How does it work and where do you get it from?

The Beginning: The National Flood Insurance Program (NFIP)

Let’s start from the very beginning. Back in the day, no one could get flood insurance because it was too costly for private insurers to offer. The only support the government provided against flood disasters was the construction of flood control works such as dams, levees, sea walls, etc., and the possibility of disaster relief. 

In 1968 Congress established the National Flood Insurance Program (NFIP) as a means to offer homeowners the opportunity to purchase flood insurance backed by the government, in exchange for community participation and implementation of measures to reduce future flood risks.

So today, if your community participates in the NFIP, you are eligible to purchase government-backed flood insurance that is offered through private insurance companies.  If you live in a community that does not participate, flood insurance is not available. There are about 85 private insurance companies that offer flood insurance through the NFIP, so if you are unsure about your community’s participation, speak with a local insurance agent.

Now the question is, do you need flood insurance?

Floods can happen anywhere, with some areas being high-risk. Homeowners that live in high-risk areas are often required by law to purchase flood insurance. Sometimes a mortgage lender will require flood insurance as well. First it’d be best to find out the different flood zone designations. Some zones are at risk from flooding due to rivers and streams, while others might be at risk of flooding due to coastal locations or storms. You can check the Federal Emergency Management Agency (FEMA) Map Service Center to see a map of the area where your home is situated to determine your flood risk.

Flood Insurance Coverage Availability

The NFIP issues flood policies up to $250,000 for residential properties. As with homeowner’s insurance, it’s important to choose a flood policy based on your needs. The standard flood insurance policy covers the main structure on the property, but does not extend to secondary structures. Flood insurance does not typically cover your personal possessions, but you can get this for an additional premium cost and coverage for up to $100,000.

Important note, there is a 30-day waiting period for new applications and endorsements to increase coverage, so with flood season right around the corner, don’t hesitate!

Please feel free to share this information with your friends and family!