How Florida's Hurricane Season Impacts Home Mortgages

As we enter another year in the Sunshine State, one thing remains consistent—hurricane season. For many Floridians, this season means more than just stocking up on emergency supplies. It's about stabilizing finances and ensuring their most significant investment—their home—is protected. Understanding the relationship between hurricane season, homeownership, and mortgage stability is crucial for anyone navigating Florida's housing market.

Let’s review everything you need to know about Florida's hurricane season, including the predictable timeline, its impact on mortgages, the importance of homeowners insurance, and how to handle mortgage adjustments in the aftermath. 

Understanding Florida’s Hurricane Season

Hurricane season in Florida runs annually from June 1 through November 30, with the most intense activity typically occurring between August and October. During this period, warm ocean temperatures and favorable atmospheric conditions create an environment for storms to form. Past storms, such as Hurricane Irma, Hurricane Michael, and Hurricane Ian, caused billions in damages and left lasting impacts on the state's housing market.

What Are the Financial Implications of Hurricane Season on Home Mortgages?

Hurricane season can influence insurance costs, mortgage approvals, and closing timelines. Here are a few storm-related financial hurdles buyers and homeowners should be aware of.

Role of Homeowners Insurance in Mortgage Approval

Homeowners insurance is a fundamental requirement for securing a mortgage in Florida. It serves as financial protection against potential property damage due to natural disasters, theft, and other unforeseen circumstances. Lenders typically require homeowners to maintain an active policy to safeguard their financial interest in the property. Without proper insurance coverage, mortgage approval may be delayed or denied.

Florida's exposure to frequent and severe hurricanes significantly impacts homeowners insurance rates. Insurers adjust premiums based on several factors, such as FEMA-designated flood zones, storm frequency, wind mitigation features, and historical claim data. Insurance companies often raise premiums or adjust coverage after major hurricanes, which increases overall mortgage expenses.

Florida buyers and homeowners should also consider the various insurance policies that protect against hurricane-related damage. Knowing the specific coverage options and nuances can help homeowners mitigate financial risks and secure mortgage approvals.

• Windstorm Coverage: Standard homeowners insurance policies may exclude windstorm damage, requiring a separate policy or rider for coverage.
• Flood Insurance: Homeowners insurance does not cover flood-related damage. Properties in high-risk flood zones should carry additional flood insurance, which is often a mortgage lender requirement.
• Hurricane Deductibles: Many policies include a separate hurricane deductible, which is typically a percentage of the home's insured value rather than a fixed dollar amount. Homeowners should carefully review these terms to ensure they can afford out-of-pocket costs in the event of a hurricane.

Property Damage and Mortgage Risk

Hurricanes may cause property damage that impacts the ability to keep up with mortgage payments. When insurance payouts are delayed or insufficient to cover necessary repairs, homeowners may face unexpected financial strain, increasing the risk of mortgage defaults.

Keep in mind that mortgage lenders may require re-inspections to confirm the property’s condition before approving any further financing or loan disbursements. If the home has sustained substantial damage, repairs must be completed before the mortgage can move forward, leading to potential delays in the lending process. 

Delays in Closing and Mortgage Processing

Hurricanes can also create complications for buyers. Due to storm-related risks, mortgage approvals and closing timelines can experience temporary delays. Active hurricanes can suspend insurance binding and halt closings. Lenders may pause appraisals and inspections during storms, creating delays for buyers.

For example, a buyer’s loan approval might be rescinded if the property sustains damage during the transaction. Repairs must be completed before the sale can close, extending timelines and increasing costs.

Handling Repairs and Mortgage Adjustments After a Hurricane

Even after you've prepared your house by boarding windows and locking up lawn chairs, a hurricane can still cause damage. Here's how to handle repairs and potential mortgage adjustments to make the recovery process smoother.

Assessing Damage and Filing Insurance Claims

Dealing with hurricane damage can be overwhelming, but taking the right steps early can make a significant difference. Properly assessing damage and navigating the insurance claims process ensures that homeowners receive the financial support needed for repairs and restoration. Here are a few tips.

• Ensure Safety First: Before assessing any damage, confirm that it is safe to enter the property. Watch for structural damage, gas leaks, and electrical hazards.
• Document All Damage Thoroughly: Take clear photos and videos of every damaged area, including both the interior and exterior of the home, to provide detailed evidence for insurance claims.
• List Damaged Items: Create an inventory of personal belongings that have been damaged or destroyed, including their estimated value and purchase date.
• Prevent Further Damage: If possible, take immediate steps to prevent further damage, such as placing tarps over broken roofs or boarding up shattered windows. Keep receipts for any emergency repairs, as they may be reimbursable.
• Contact Insurance Provider Immediately: Notify your insurance company as soon as possible and provide all necessary documentation. Follow up regularly to ensure claims are being processed in a timely manner.

Refinancing After Repairs

After a hurricane, many homeowners consider refinancing their mortgage to improve their financial situation and stabilize their homeownership expenses. Given the potential impact of storm-related damage, refinancing can be a strategic move for homeowners looking to strengthen their financial foundation and improve their home’s resilience.

• Opportunities for Lower Interest Rates: Once repairs are complete, refinancing may provide an opportunity to secure lower interest rates or switch to a more favorable loan term. A lower interest rate can reduce monthly mortgage payments, making homeownership more affordable in the long run.
• Accessing Cash for Additional Improvements: Homeowners who have invested in repairs following a hurricane may also consider a cash-out refinance. This type of refinancing allows homeowners to borrow against the increased equity in their home, using the funds for additional improvements, emergency savings, or other financial needs. Cash-out refinancing can be especially useful for upgrading hurricane-resistant features such as impact-resistant windows, reinforced roofing, or elevated foundations.
• Importance of Post-Repair Appraisals: A new appraisal is crucial after major repairs to ensure that the home’s updated value is accurately reflected in refinancing decisions. Lenders require an appraisal to determine the property's worth and confirm that it meets the necessary standards for loan approval. Additionally, a higher appraised value can improve loan terms, increase borrowing power, and help homeowners access better financing options.
• Timing and Considerations for Refinancing: Timing is key when refinancing after repairs. Homeowners should ensure all repairs are completed, necessary inspections are conducted, and all documentation is in order before applying for a refinance. Review existing mortgage terms and assess potential savings before committing to a new loan. Consulting with a trusted lender, such as Crews Bank and Trust, can help homeowners navigate refinancing options, assess eligibility, and secure the most beneficial terms for their financial situation.

Protect Your Home and Mortgage During Hurricane Season

Hurricane season in Florida affects more than just the weather; it impacts home values, buying decisions, and mortgage stability. Whether you're buying a home or protecting the one you already own, understanding Florida’s hurricane season is essential. With the right knowledge and preparation, buyers and homeowners can ensure stability and security even in the face of unpredictable weather.

Reach out to our experienced lenders for personalized guidance on navigating mortgages during hurricane season. Crews Bank and Trust is here to help you protect your investment and ensure your financial stability, rain or shine.