Hurricane season is here, and I just took a listing on a townhome in a complex which is self-insured, so thought a few words regarding hurricane insurance would be timely.
Our property taxes are pretty low (about .004 X purchase price) but we make up for it in the cost of windstorm insurance. If you are getting a mortgage on a single family home, you can expect to pay 2 - 3% of the mortgage in windstorm insurance. Even then, you will be underinsured and likely have huge deductibles, and possibly penalties, should you incur damage. To be fully insured, calculate 2 - 3% of the replacement value.
Now, if you are purchasing a condo, some of the complexes have commercial windstorm insurance. These will likely have higher monthly fees (our condo fees here range from $250 - $1200 a month). Smaller complexes can't afford commercial policies (the monthly condo fees would be prohibitively expensive) so they "self-insure." That means that a portion of the monthly condo fees goes into a "pot" or reserve fund to take care of any damages that might be incurred due to a hurricane.
If there is not at least a million dollars in the reserve fund, then most likely, the banks will not lend on these units. In the past, they would lend, but they would require the buyer to buy their own commercial insurance policy (again - at 2 - 3% of the mortgage). So, on top of the monthly condo fees, you would have had hurricane insurance payments.
In today's stricter lending climate, many are just not lending on self-insured properties. If you can pay cash for a condo or home, you can avoid this issue altogether. If I were buying a home or condo today, I'd do my best to be a cash buyer and I'd make sure I had at least $10,000 in "reserve" for my own hurricane fund, and skip the commercial insurance. Not so easy for most of us, I know.
A few years ago I purchased a self-insured condo here. I took out a home equity loan to do so, and avoided the insurance issue. I'm probably paying a bit more interest than I would with a mortgage loan, but I can pay it down as I'm able.
If you're considering purchasing a home or condo here, be sure you speak with a lender or realtor to get an idea of all the expenses you can expect to incur. Be creative and ask the seller to be creative - it is a Buyer's Market. Just don't expect to come here with no job and get a mortgage on a home.
We have always had a strict lending climate here (which is why we don't have many foreclosures), and it's much more difficult now to get a loan than ever before. Our lenders don't charge to talk with you and pre-qualify you - and believe me - you can save yourself a lot of pain and suffering by doing this BEFORE you start looking for a home or condo!
Contact me for names and numbers of good lenders here. I will help you try and purchase, and work with sellers to find creative - legal - ways for you to buy a home. St Croix is still the best value in the Caribbean and will only be more expensive in the future. Let's work together on making your dream of living in the Caribbean come true!
St Croix Island Life Real Estate
5000 Estate Chenay Bay
Christiansted, VI 00820