Finance
The National Flood Insurance Program (NFIP) is particularly important in Louisiana because:
AAll Louisiana properties are in a flood zone
BMuch of Louisiana is low-lying and flood-prone, requiring flood insurance for federally backed loans✓ Correct
CLouisiana has no private flood insurance market
DNFIP rates are lower than private insurance in Louisiana
Explanation
Louisiana's low-lying geography and coastal location make flooding a significant risk. Properties in FEMA-designated Special Flood Hazard Areas require NFIP or equivalent flood insurance for federally backed mortgages.
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Key Terms to Know
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
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.
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