I'm currently applying for a HELOC with my bank and after several questions and requests for certain documents, etc. that I supplied, I was told that before final approval I would need to increase my home owner's flood policy to include the amount that I requested. Before I do anything, Is this a normal procedure? I wasn't aware that I had to do this with an equity line of credit. I've had a couple of home equity loans before and I've never had to do that. Why would they ask for that?
If your home is in a flood hazard area (we assume it is, since you have flood coverage for your first mortgage), every lender making a loan that's secured by an interest in that real estate is required by law to ensure there is flood coverage up to the total balance of its loan (in the case of a HELOC, the lender has to verify there is coverage adequate for both the first mortgage and the new loan), or the maximum coverage available in your area, whichever is less. We can't speculate why you haven't been required to have this coverage before -- the rules have been substantially the same for several years.
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If your home is in a flood hazard area (we assume it is, since you have flood coverage for your first mortgage), every lender making a loan that's secured by an interest in that real estate is required by law to ensure there is flood coverage up to the total balance of its loan (in the case of a HELOC, the lender has to verify there is coverage adequate for both the first mortgage and the new loan), or the maximum coverage available in your area, whichever is less. We can't speculate why you haven't been required to have this coverage before -- the rules have been substantially the same for several years.
