Buying a home is a large financial responsibility for anyone. You are investing a large portion of your monthly income, and most likely all or most of your savings, into the property. All homeownership comes with risks, but for anyone planning to purchase in an area at high risk for fire, it becomes even more critical to properly protect your home.
First, how do you define “high risk.” In some cases, where the home is set near dry grass or heavily timbered areas, it may be easy to understand, but some homeowners are shocked to learn they also are considered high risk by their insurance companies. Due to draught conditions, there are many locations that fall into “hot spots” that will require extra fire insurance. In California, some areas can only get fire insurance through the state itself.
Your mortgage company will also have concerns about the fire risk to the home and their liability in covering loss. While rarely will the location impact your ability to get a loan, the amount and cost of fire insurance – homeowner’s insurance – will be significantly higher than in other locations. The mortgage company will continue to require insurance that adequately covers the cost to rebuild and this can add thousands of extra dollars to your annual homeownership cost compared to less risky areas.
There is no reason to automatically reject a home you love in a high fire risk location, but before falling in love, it’s worth researching all the costs and risks associated with the purchase.