Storm Resources

Flood Resources

Following the devastating floods that have occurred in our area, EFCU Financial has compiled a list of area resources to help you and your family recover and rebuild. 

 

When Preparing for Storm Threats, a HELOC May Make Sense

During hurricane season, coastal residents often bolster storm doors and windows, and stock up on flashlights, batteries and water. But homeowners should also prepare for the impact a storm could have on their wallets. Here’s a primer on insurance deductibles for windstorm damage and why home-equity financing could help you meet yours.

Breaking down deductibles

From 1994 to 2013, tropical storms and hurricanes caused $159.1 billion in insured losses in the U.S. In response to major losses, such as those caused by Hurricane Andrew and Hurricane Katrina, many insurers have introduced hurricane and tropical storm deductibles. A deductible is what a policyholder must pay for a loss before the insurer steps in. Peril-specific deductibles make policyholders in some coastal states shoulder more risk and hold down premiums for other homeowners.

In states such as Louisiana, a storm that’s given a name by the National Hurricane Center can trigger a deductible that reflects a percentage of your home’s value — often as much as 5% — rather than the flat figure deductible associated with fire or theft. That percentage may not seem like much, but it would cost you $10,000 for the total loss of a $200,000 home. Most people can’t afford to foot such a big bill without warning. 

Bolstering your wallet

Obtaining a home equity line of credit, or HELOC, is one way to prepare for a hurricane deductible. Available at lenders such as EFCU Financial, a HELOC lets you use the equity built up in your residence — that is, the difference between the property’s current market value and the balance you owe on your mortgage.

A HELOC is similar to a revolving charge account, such as a credit card. You can borrow up to the amount of your loan over a set period of time, and you pay interest only on what you borrow. Interest rates on HELOCs are typically lower than those for other forms of credit, and interest payments are often tax deductible. However, because the loan is secured by your home, you risk foreclosure if you fail to make payments.

If your home is significantly damaged by a tropical storm or hurricane, you may be able to pay your deductible with a HELOC, rather than dipping in to your savings or using your credit card. But make sure that the HELOC can’t be rescinded if your home’s market value drops because of storm damage.

During hurricane season, homeowners along the Gulf of Mexico and the Atlantic seaboard could be exposed to the potentially devastating effects of these storms. Prepare for whatever blows nature might deliver to your wallet.

Cait Klein, NerdWallet

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