Wise men of Chiefsplanet

[Nirvana58]

I need help with a problem with my mortgage company. I bought a house 6 months ago getting my loan through sunflower bank. Who then promptly sold my loan to BB&T. My house require flood insurance (which is stupid in its own right..... Hurry up FEMA and release your new flood maps). Anyway, the loan documents I signed with sunflower state I have to have flood insurance that covers the principle amount of the loan. (Which I do). Now BB&T is saying that I have to have replacement cost for building a new house and saying I need to be covered for a god holy amount that there is no way I can afford. They say if I don't purchase it they will and charge me more. I don't know what to do here. I need the wisdom of the wise men and women of chiefsplanet.

[cosmo20002]

Originally Posted by Nirvana58

It actually would be a little bit higher. I did a fixed interest when it was at 3.375%. I just happened to be looking at the right time. Either way I think it will be worth it because if I refinance I can drop the PMI. It is just coming up with the money for closing cost. I have everything I have wrapped up in repair cost to fix up the house.

You don't need to refinance to drop the PMI. Once you have 20% equity, you can tell them to stop PMI and they have to stop.

[Nirvana58]

Originally Posted by cosmo20002

You don't need to refinance to drop the PMI. Once you have 20% equity, you can tell them to stop PMI and they have to stop.

I bought the home a lot less then what it was worth. They originally go by the sell price of your home with PMI so I didn't meet the 20% equity on my down payment. However, If I refinanced my home now after repairs and the new appraisal the loan will easily be less than 80% of the new appraisal. So I should be able to drop the PMI. I know the red tape on this shit is ridiculous.

[Nirvana58]

Originally Posted by LOCOChief

Refinancing will do nothing to solve this issue. Coverage requirements will be the same.

Unless there is some new law in effect here is the requirements that I was told by my original lender and what I signed at the time I took out my loan. This is from FloodSmart.gov


Why does my mortgage lender require me to buy flood insurance?
Under federal law, the purchase of flood insurance is mandatory for all federal or federally related financial assistance for the acquisition and/or construction of buildings in high-risk flood areas (Special Flood Hazard Areas or SFHAs).

The amount of flood insurance coverage required by the Flood Disaster Protection Act of 1973, as amended by the National Flood Insurance Reform Act of 1994, is the lesser of the following:

The maximum amount of NFIP coverage available for the particular property type,
The outstanding principal balance of the loan, or
The insurable value of the structure.

If the property is not in a high-risk area, but instead in a moderate-to-low risk area, federal law does not require flood insurance; however, a lender can still require it. It is also recommended since historically one-in-five claims come from these moderate-to-low areas. Note that if during the life of the loan the maps are revised and the property is now in the high-risk area, your lender will notify you that you must purchase flood insurance.