Finance
A Connecticut buyer's lender requires a 'flood certification' before loan approval. This certification determines:
AWhether the property has ever been flooded
BWhether the property is located in a Special Flood Hazard Area (SFHA) as defined by FEMA's flood maps✓ Correct
CThe estimated flood damage from a 100-year flood event
DWhether the property has flood insurance
Explanation
A flood certification (Standard Flood Hazard Determination Form) uses FEMA's Flood Insurance Rate Maps (FIRMs) to determine whether a property is in a SFHA (high-risk flood zone). If the property is in a SFHA, the lender must require flood insurance.
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Key Terms to Know
Debt-to-Income Ratio (DTI)
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
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