June 2008 Archives

June 18, 2008

Will Your Homeowners' Insurance Cover a Flood?

The recent flooding in the Midwest is a reminder of a single act of nature can have homeowners running to their insurance policy for help -- only to find, in many cases, that they're not covered. Recent news reports say that a tiny minority of homeowners in Indiana and Wisconsin had flood insurance. As is typical, some say they didn't think they were in a flood plain, and that their lending bank didn't require flood insurance to be included in their policy.

We said this in our book, Nolo's Essential Guide to Buying Your First Home, but we'll say it again: The flood zone maps are not always up to date, they're drawn to such a large scale that they're not necessarily accurate for individual properties, and they have traditionally identified flood areas based on the worst flood likely to occur in 100 years, or 1% of the time.

Meanwhile, flooding is the United States' most common natural disaster, affecting many people who live nowhere near water. Melting snow, overflowing creeks or ponds, a weak levee, or water running down a steep hill can all cause flooding. And experts say climate change is making it worse by bringing more severe storms.

Does that mean everyone needs flood insurance? Probably not (though it is relatively affordable if your house is not in a designated, recognized flood plain). But before finalizing your insurance policy (assuming you're just buying a home) or renewing it (if you already own), check with your neighbors, the local flood control board, and your city building department about recent trends.

June 11, 2008

Credit Score Scams: Don't Get Snared

A good credit record and score has always been important, but with the tightening up of the mortgage industry, people with a low score may have a harder time than ever buying a house -- a shame, if you want to take advantage of recent dips in home prices.

But, warns Kenneth Harney, that's no reason to pay money to the various companies that promise to not only raise your credit score, but find you an affordable home in foreclosure and a low-cost mortgage to boot. For details of the consumer complaints and FTC lawsuits that these companies have engendered, see Harney's article in the San Francisco Chronicle.

As for raising your credit score, you'll have to do it the old fashioned way: by paying down your debt, paying bills on time, and more, as discussed in Nolo's article on Credit Scoring.