Refinancing;adequate insurance concern

dixieagle · Joined: 25 Sep 2006 Posts: 2 2.59 Dollars($)

I had mistakenly posted this elsewhere, but think this forum may be the appropriate place.

We are in the process of refinancing our vacation home (half-duplex condo) with cash out towards a down payment on another property and I wonder about how much hazard and flood insurance Chase will require. The condo assn. collects fees, out of which the insurance is paid, but I worry that the current appraisal, and amount financed, may be larger than the coverage the assn. holds.

The unit is in the Gulf coast area (AL) and the condo assn. qualified for AL wind pool coverage, but I worry that the coverage won't satisfy Chase. We're pre-approved and have just completed the application and they have not yet asked for insurance proof. The flood insurance amounts to about half of what the current, newly appraised value is, and $90,000 less than the new mortgage. Hazard insurance is "actual cash value," rather than "replacement cost." It is crucial that this mortgage falls into place, so I am looking for good advice as to the options available; supplemental policy?

Thanks in advance.

sara

Hi Dixie,

You can apply for a standard homeowners insurance policy offering coverage for the structure of your home, your personal belongings, liability protection (injury caused to anyone on your property) and other living expenses under certain conditions.

In your situation, the hazard and flood insurance policies are available, so you can go for the standard policy in order to cover the remaining amount of mortgage.

If you are interested to know more on Homeowners Insurance Policy , refer to an article on this topic.

Thanks,

Sara

Guest 0.10 Dollars($)

Thanks for answering, Sara. I guess what I am asking boils down to this: is it possible for individual condo unit owners to purchase additional flood/hazard policies to make up for any limits or inadequacies (in the eyes of the mortgage company doing the refinance) in the existing flood/hazard policies purchased by the condo association. (We already have a personal liability and contents policy in place on our unit.)

Marie

Caron

Hi Marie,

Welcome back.

You can go for excess flood insurance/hazard insurance policies in case the current insurance policy is not sufficient to cover the mortgage. For this, you need to contact any private insurance provider offering a higher coverage. The costs of such an insurance policy depend on the risk of flood and replacement value of the property.

However, in some states, there are certain regulations which do not allow for an excess insurance coverage. So, it will be better if you check this out with a private insurance provider or the mortgage company itself. I think the professionals there will be able to tell you if at all there is a law against such excess policies.

Thanks,

Caron.

Guest 0.10 Dollars($)

Hello again,

I am so frustrated I could scream. Although it looks as if getting the right amount of flood insurance to satisfy the lender will be easy, it appears we may have reached an impasse with regard to the hazard insurance requirements. Our appraisal came in at $290000, and we have been approved for a $232,000 refinance w/cash out (pay remaining debts, use the rest as a down payment on another property.) The condo association's master hazard policy is for $175,000 on our building (contains two unts in a duplex, raised 9 feet off the ground) which is felt to be sufficient to rebuild. The lender insists on "guaranteed replacement coverage" which is not the language of the policy (actual cash value.) The insurance company doesn't believe the building is underinsured, and the other owners are fine with it, but we are apparently stuck. In this area, market values have risen dramatically, though rebuilding costs haven't risen at the same pace. We are perfectly willing to purchase substantial supplemental insurance ourselves, but we can't find anyone writing condo policies in coastal Alabama right now (post-hurricane stress disorder, I call it.) The lender will have its insurance department look at the policy, but I don't hold out much hope.

We've been dealing with a big national lender (Chase; current mortgage is with them, but insurance has not been a problem because the amount is much lower.) I am wondering if we should approach a local mortgage broker to see if there are lenders who are more familiar with the local situation and may be more amenable to the insurance situation. We have been counting on this refinance, and I am so upset.

Thanks for any insight and help.

Marie

adonis · Posted: Fri Dec 15, 2006 1:18 am Post subject:

i don't have any idea about companies offering condo policies in Alabama but let me check out. If I get something I shall surely let you know.

Guest 0.10 Dollars($)

I think it will be ok if you give some time and see if the lender can increase the policy limit as they have said they would look into the matter.

Caron

Hi Marie,

Don't be upset. We shall together try to find out a solution to your problem.

Did you check for additional insurance coverage from other insurance companies? I think it's better to do so. You can also look for a broker to see if there are other lenders who can be amenable with the insurance coverage. But then if you change the lender, you will again have to refinance. There will be a lot of costs involved.

By the way, how long did the lender tell you to wait before they look into the insurance policy? If it's a matter of few days, then you can wait and see if they can help you out. Otherwise, I don't find any other way except going for an extra coverage. Still I shall discuss with some of my friends; let me see what they have to say.

Thanks,

Caron.

Guest 0.10 Dollars($)

"Did you check for additional insurance coverage from other insurance companies? I think it's better to do so. You can also look for a broker to see if there are other lenders who can be amenable with the insurance coverage. But then if you change the lender, you will again have to refinance. There will be a lot of costs involved. "

I have called a number of local insurance companies, and get the same answer; post-hurricanes, policies for frame structurs and condo associations in partiular are essentially impossible to get now. The agent handling the condo assn.'s flood policy, and the additional flood insurance we are purchasing (easy and cheap, thank God) is looking into any possible extra coverage, but it would be a miracle if she could find it. The loan processor has the proof of insurance and simply indicated it would have to go to Chase's insurance department (Florida) to see if they would approve it; she didn't hold out real hope, and I don't know how long they take. In the meantime, I have called a recommended local broker and explained the situation, asking about the existing policy and lender requirements. She seems knowledgeable of the local market and is checking into possibilities with some of her lenders.

Whether Chase's insurance department might suggest "force placed" coverage (I know they also handle insurance, and that it is certainly expensive) I don't know; they may not be able to come up with coverage, either! That's the dilemma;we'd be willing (within reason) to increase the coverage, but can't find anyone willing to do it.

If Chase can't work with us, we simply have to hope that the local broker can. We'd only be out the Chase fee, $395, as we're a couple weeks from the originally scheduled closing.

Thanks for your input and concern.

Marie

sara · Posted: Fri Dec 15, 2006 11:21 pm Post subject: RE: Insurance coverage

Hi Marie,

If the loan processor cannot give the assurance as to whether she would be able to extend your insurance coverage, then it's better not to wait. but then suppose chase provides you with the coverage and on the other hand, the broker too finds out such lenders, then it will be all mixed up.

On one hand, you may think of accepting Chase's extra coverage and on the other hand, you need to pay the broker for her services even though you may not finalize a deal with any of her lenders. Did you think over it? I am saying this because then your money will be wasted.

But then I also don't see any other way out except going by the way you have chosen. Let's see what others have to say here.

Thanks,

Sara

Guest 0.10 Dollars($)

"On one hand, you may think of accepting Chase's extra coverage and on the other hand, you need to pay the broker for her services even though you may not finalize a deal with any of her lenders. Did you think over it? I am saying this because then your money will be wasted. "

We should hear something from Chase about the adequacy (for them) of our condo assn. policy Monday. I spoke with the Chase processor today - a nice, very bright and responsive lady who has also been very honest about their strict insurance requirements. She had not yet seen the actual proof of insurance, as there was a delay by the agency in faxing it to her, but she should have it in hand by now. I'm hoping that we'll get a firm answer - even a "no" - as we could then fully pursue whatever options the local mortgage broker may come up with. She has, indeed, seen the insurance coverage and sees nothing out of the ordinary with it. (On the off chance that things do fall into place with Chase, we will gladly pay the local broker a fee for the inquiries she has already made.) At this point a couple hundred extra dollars is a small price to pay for us to get on with things!

Thanks.

Marie

helping_user · Posted: Sat Dec 16, 2006 12:37 am Post subject: RE:

Hi Marie,

I agree with you. At times, we do have to pay little to gain in the long run. at least if that settles a few things in place, then that is absolutely ok.

I think you have done the right thing by approaching the broker. let's see if he can help you fix things in the right place.

Best wishes Smile

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