Rural Interest rates higher

swollen tongue · #1 08/20/10, 08:22 PM

I have always been ripped off on interest rates for morgatages in rural areas with acreage and a house. It has always been 2-3 percent higher it seems that what banks advertise........any comments or suggestions?

**Roadking** · #2 08/20/10, 09:30 PM

Generally, a rural area would have a higher rate of default, less job stability, less modern accomodations (i.e. our water supply was a spring...NOPE. gotta have a well), fire departments not as close as citty dwellings...In general, it's a higher risk which calls for higher rates.
Just my $0.02
Matt

texican · #3 08/20/10, 11:43 PM

You pay more for everything out in the country. It's all written up in the secret book, "How to Keep People In the City".

myheaven · #4 08/20/10, 11:53 PM

I agree with roadking and texican. We are dealing with the same. Its almost impossible to sell a forclosed farm as a whole.

Chixarecute · #5 08/21/10, 07:54 AM

In the middle of refinancing myself, the interest rate will also depend upon your credit score, the amount of equity you have, the appraisal, how much it is worth at todays value vs how much you want to borrow, any other liens against the property... and probably the amount of competition for loans at any given moment of the day.

GoldenCityMuse · #6 08/21/10, 08:53 AM

A much higher percentage of people pay cash for rural acreage as well.

jill.costello · #7 08/21/10, 10:19 AM

USDA Rural Development loan. FIXED low interest rate (I believe it's at 4.75% right now), and NO DOWN PAYMENT...... google it!

plowjockey · #8 08/21/10, 10:29 AM

Never heard of this.

Usually the low-ball rates advertised, are teaser rates with high points, etc. and they never end up being what the fianal APR is.

We just refied to a VA, which are usually higher than conventionals, but not by the percenatage you have stated (it was about .5% higher).

IMO, the rural market should be about as good, or better than the city.

edcopp · #9 08/21/10, 10:38 AM

It is all about money as usual. It is about supply and demand. Think about it for a minute, how many people do you know who have a nice little place out in the country, who are dying to sell it, perhaps at a loss and move into the inner city slums? (Demand).

Most folks are not "cash heavy", at least the ones that I know. They usually need some financing (Demand).

CASH, the lenders have plenty, and their supplier the FED just prints it, so they have the supply.

The lenders are not interested in the property, or the cash for that matter. They just want the profit, the interest. So it is all about the money. Most likely always will be too.

Dwayne Barry · #10 08/21/10, 01:43 PM

Quote:

Originally Posted by jill.costello

USDA Rural Development loan. FIXED low interest rate (I believe it's at 4.75% right now), and NO DOWN PAYMENT...... google it!

We just used one of those to purchase our new house. Oddly enough we're in town, but our whole area of the country qualifies for them. No strings attached as far as we are aware.

Wayne02 · #11 08/21/10, 03:25 PM

Quote:

Originally Posted by texican

You pay more for everything out in the country.

Yep, and that is one of the dirty little secrets about rural living, another is that there is little crime in the rural areas.

jill.costello · #12 08/21/10, 05:27 PM

Quote:

Originally Posted by Dwayne Barry

We just used one of those to purchase our new house. Oddly enough we're in town, but our whole area of the country qualifies for them. No strings attached as far as we are aware.

It is a FANTASTIC loan product that allows you to borrow 102% of the appraised value; they let you roll their loan origination fee right into the note (if you want). You can see right online if the area you're looking to buy in is eligible (MANY areas are eligible), and then you can check if your family's income is low enough for the area in which you are looking, too. Right online! They prefer your credit score to be over 635, BUT will make allowances in underwriting for unusual or mitigating circumstances!

plowjockey · #13 08/21/10, 09:58 PM

Quote:

Originally Posted by jill.costello

It is a FANTASTIC loan product that allows you to borrow 102% of the appraised value; they let you roll their loan origination fee right into the note (if you want). You can see right online if the area you're looking to buy in is eligible (MANY areas are eligible), and then you can check if your family's income is low enough for the area in which you are looking, too. Right online! They prefer your credit score to be over 635, BUT will make allowances in underwriting for unusual or mitigating circumstances!

Isn't this type of mortgage lending, one of the main reasons, the mortgage and housing industry collapsed, as well as the U.S. economy?

Mike in Ohio · #14 08/21/10, 11:17 PM

It may relate to your credit score or other factors.

We had no problem refinancing (it was actually modifying the loans for both interest rate and duration) loans on 3 parcels at our farm recently. Interest rates were exactly as advertised and the fees to redo the loans were extremely reasonable. We paid a 1/4% over what was being quoted for 15 year mortgages on primary residences. This is through farm Credit - at least in Ohio they have been very aggressive about telling folks it is a great time to refinance or buy additional land.

I'd say that there has never been a better time to finance a property assuming you have excellent credit.

Mike

jill.costello · #15 08/23/10, 06:18 AM

Quote:

Originally Posted by plowjockey

Isn't this type of mortgage lending, one of the main reasons, the mortgage and housing industry collapsed, as well as the U.S. economy?

One would of course have to QUALIFY for the amount they were asking to borrow. The front-end ratio and back-end ratio would have to work out, just like any other note.

It was my understanding that the mortgage and housing industry collapsed because of lending MORE MONEY than the borrower could reasonably pay back at the interest rate provided. (i.e. letting someone borrow to the tune of having payments that were 50-60% of their total income for the month)

The USDA loan has income limits as well as debt limits; they will only loan on a property you can AFFORD (which is as all mortgage companies should be doing, but WEREN'T)

swollen tongue · #16 08/23/10, 01:12 PM

thanks for all the info.........

Txrider · #17 08/23/10, 02:51 PM

Quote:

Originally Posted by jill.costello

One would of course have to QUALIFY for the amount they were asking to borrow. The front-end ratio and back-end ratio would have to work out, just like any other note.

It was my understanding that the mortgage and housing industry collapsed because of lending MORE MONEY than the borrower could reasonably pay back at the interest rate provided. (i.e. letting someone borrow to the tune of having payments that were 50-60% of their total income for the month)

The USDA loan has income limits as well as debt limits; they will only loan on a property you can AFFORD (which is as all mortgage companies should be doing, but WEREN'T)

A lot of it was also adjustable rates, that people didn't understand would rise, by how much, and when...

And people who saw their property value drop to 50% of what they owed on it, and just walked away.

edcopp · #18 08/23/10, 04:29 PM

Quote:

Originally Posted by Mike in Ohio

It may relate to your credit score or other factors.

We had no problem refinancing (it was actually modifying the loans for both interest rate and duration) loans on 3 parcels at our farm recently. Interest rates were exactly as advertised and the fees to redo the loans were extremely reasonable. We paid a 1/4% over what was being quoted for 15 year mortgages on primary residences. This is through farm Credit - at least in Ohio they have been very aggressive about telling folks it is a great time to refinance or buy additional land.

I'd say that there has never been a better time to finance a property assuming you have excellent credit.

Mike

I wonder how many folks there are floating around with excellent credit, who are in the market to refinance. Seems like most of those who need refinancing have been pretty well butchered by the system, mainly the bankers who own our government.

silverbackMP · #19 08/23/10, 05:06 PM

It's probably do to a non-conforming loan. In other words can't be bundled up and sold off to Freddie or Fannie. The bank holds it or sells it to a non-gov agency. It actually closer to the true interest rate that the market would set if Feddie and Fannie weren't involved. Would've stopped the housing bubble if all loans were like this.

Txrider · #20 08/23/10, 05:09 PM

Quote:

Originally Posted by plowjockey

Never heard of this.

Usually the low-ball rates advertised, are teaser rates with high points, etc. and they never end up being what the fianal APR is.

We just refied to a VA, which are usually higher than conventionals, but not by the percenatage you have stated (it was about .5% higher).

IMO, the rural market should be about as good, or better than the city.

It depends on a few things though..

I had to pay a rate quite a bit higher on land, than I do on my house mortgage. I live in another county, and the rates on my land are higher because it is seen as a higher risk, easier for me to walk away from. Not living there makes it an investment, not a homestead to the banks eyes.

So I'm at 2.5% higher than the mortgage on my house, unless I can find someone to refinance me cheaper, which I may look for with rates out there as low as they are.