After many disasters in the U.S. there’s mention of FEMA offering low interest loans, I’ve read the maximum loan is $200K for homeowners. As an example if in fact if true, 2,000 homes were burned down in Hawaii, many of the homes lost had values in excess of $1M, do homeowners need to locate an additional loan of $800K?
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Yes – the loans exist to help repair damages on your primary residence up to $200k. They are designed to primarily benefit lower-income people who did not have other forms of disaster insurance so that they are not left completely destitute.
If the repair of your property is going to be above $200k, you’ll need to secure other funds to help with those repairs. Ideally, you would have had homeowners insurance to help cover those costs – if you don’t, you’ll have to come up with additional loans yourself or simply not repair to the previous value.
Government loans like this are not meant to replace private insurance – they are meant to be a safety net for poorer people to prevent them from losing everything.
The FEMA disaster loans are meant to cover any gaps left by insurance. Homeowners almost universally carry insurance for something like the value of the house (many are required to by their mortgage lender!) but that might not cover removing debris or replacing furniture.
I think you’re confusing the value of the entire property with the value of the actual dwelling on that property.
The value of a property includes the land. The value (or cost of replacing) a home does not. The owners who lost homes in Lahaina still own their land, and therefore will not be compensated for that part of the total value.
While $200K is probably not enough to cover the cost of building a new, modern home in Lahaina, it will get you a long way toward that goal.
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