First Person: Paying Off My Mortgage to Protect Against Insurance Hikes

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A lot of my Florida neighbors who live in flood zones were hit recently with flood insurance premiums that dramatically increased. According to a recent article by Insurance Journal, lawmakers have been so busy fighting over ObamaCare that they neglected a bipartisan proposal to delay the Biggert-Waters Flood Insurance Reform Act. After hearing about the problems people trying to pay their homeowners insurance in Florida and states such as Mississippi and Louisiana, I realized I need to prepare for higher premiums. Another solution is to pay off my home so I have more financial flexibility and freedom.

Once I own my Florida home outright, I will be able to pick and choose what I want my homeowner's insurance to cover. Since I have a mortgage on my home, I'm forced to carry a certain amount of insurance to satisfy my lender. Living in Florida, I never know whether I'm going to be charged more for hurricane, flood or sinkhole issues. We want to have the financial flexibility and freedom to make our own choices about how to protect our home and assets.


I don't have any sinkhole coverage at this time because it's not required. However, if more incidents that occur with sinkholes in my area, it's possible banks will begin requiring sinkhole coverage. Because it's such an unlikely scenario, I wouldn't pay for sinkhole coverage if I owned my home outright.


We are paying more money for insurance to protect us in case of a hurricane due to the past hurricane problems. When one of my relatives moved to Florida, she was shocked that her homeowner's insurance coverage nearly doubled due to the higher cost of hurricane coverage.


When we purchased our home, we made sure to buy a property well away from the flood zones. However, a lot of people who live in nearby communities pay subsidized flood insurance rates through the National Flood Insurance program. As the program undergoes reform, the rates are rising for dramatically for people in coastal areas near us. Although my husband and I used to want to buy a beachfront property, we can no longer afford to pay a full-risk premium on waterfront homes.


I was surprised to learn people in my community had to spend $2,000 to $4,000 do replace outdated pipes or lose their homeowner's insurance coverage. Since we purchased a new home, we have not had any problems with outdated electrical wiring or pluming. I steer my children away from purchasing older homes due to the unexpected maintenance problems.

Higher insurance rates would hurt us if we chose to sell our home. Even if our home isn't in a flood zone, many of the homes in our community are in flood zones. Sellers are being forced to sell their homes at cheaper prices since many prospective buyers can't afford the higher payments due to skyrocketing flood insurance premiums.

Since we want to stay in our home, we will want to keep some homeowner's insurance even if we aren't being forced to carry it by the banks. By paying off my home early, it will be easier to afford the homeowner's insurance as well as the property taxes. Since we don't have control over mother's nature or Uncle Sam, we have to control what we can.

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