Finance
A Connecticut lender requires a 'flood certification' as part of a mortgage application to determine:
AWhether the property has flooded in the past
BWhether the property is located in a FEMA Special Flood Hazard Area requiring flood insurance✓ Correct
CWhether the property has adequate drainage
DWhether the basement is at risk of water intrusion
Explanation
A flood certification (Standard Flood Hazard Determination) identifies whether the property is in a FEMA-designated flood zone requiring mandatory purchase of flood insurance as a condition of a federally backed mortgage.
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Key Terms to Know
Loan-to-Value Ratio (LTV)
The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
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