If you obtained a mortgage anytime since 1994, you likely noticed the “flood cert” charge on your Good Faith Estimate, the form which details your expected closing costs.
Additionally, if your home or business is located in a NFIP flood plain, you may have been required to obtain an “elevation certificate.”
Either way, you’re probably wondering what the document is, does, and most importantly…what it costs.
What Is the Elevation Certificate Exactly?
The elevation certificate is a document prepared by a land surveyor (or other licensed individual or company) that details the elevation of your home in reference to the Base Flood Elevation, which is also referred to as the “BFE.”
The BFE is basically the level at which flood waters will top out on your particular property.
Why Do I Need an Elevation Certificate?
According to FEMA, the elevation certificate is “used to provide elevation information necessary to ensure compliance with the community floodplain management ordinances, to determine the proper insurance premium rate, and to support a request for a Letter of Map Amendment (LOMA) or Letter of Map Revision based on fill (LOMR-F).”
Again, if you are borrowing money to purchase a piece of property, whether personal or for business, your lender will require flood insurance in order to fund the loan.
It is also generally a good idea to have flood insurance even if not required by your bank, as homeowners insurance policies DO NOT COVER flood damage to your building or property (what is covered by flood insurance?).
What is a LOMA and LOMR-F?
If your property is zoned in a flood plain, but you feel the zoning is inaccurate, you have the option to attempt to get the property re-zoned and avoid the insurance requirement or at least lower your premium.
The elevation certificate, assuming it demonstrates you are not subject to the flooding in your particular zone, would be your evidence to have the property re-zoned.
Thus, the “letter of map amendment,” which is the letter you write to the local flood plain manager, who can ultimately re-zone the property.
When it comes to the LOMR-F, you are typically dealing with land developers, or home builders. In some instances, builders will attempt to “fill” the land with more dirt (essentially) in order to have the entire development above the BFE (discussed earlier).
Once the fill is complete, the developer begins the process of attempting to have the property re-zoned to demonstrate that it’s above the BFE and therefore not subject to flood losses.
This process makes the property on the development much more desirable for end user purchase and bank financing.
Note: Obtaining an elevation certificate does not provide a waiver of the flood insurance purchase requirement.
Basically, your lender will not allow you to forego the requirement for flood insurance simply by obtaining this document. It is up to them to require flood insurance regardless of the results of the elevation certificate.
Your home, hopefully, is built above that level, as that would mean you are less likely to suffer a flood related loss on your property…which should drive down your flood insurance premium.