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Post By MNMamaBear
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08/08/13, 12:35 PM
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Join Date: Jun 2013
Location: Dayton ohio
Posts: 42
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Farm Financing
My wife and I are looking at a purchasing a farm soon. We are currently looking for financing. Are there any special programs or banks we should look at other than the usual banks.
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08/08/13, 12:42 PM
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Join Date: Jul 2013
Location: Mountain Home, Arkansas
Posts: 2,550
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Hmmmm. I have never heard of any? any special farm financing anyway.
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08/08/13, 12:52 PM
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Join Date: Apr 2013
Location: Illinois
Posts: 1,125
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The USDA has a "Rural Development" loan program.
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08/08/13, 01:21 PM
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Join Date: Jul 2013
Location: Mountain Home, Arkansas
Posts: 2,550
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Quote:
Originally Posted by MNMamaBear
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And this is the reason I commented. Thanks
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08/08/13, 02:55 PM
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Join Date: Jan 2004
Location: MN
Posts: 7,570
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Regular banks like to package up very generic, similar house loans that are set up to fit into govt pre approved loan packages, all one like the other and the govt ends up backing them.
When you buy a farm or an acreage with some acres or some farm land or so e forest or existing buildings beyond a house and garage, then your property does -not- fit into those cheap govt backed home loan packages, and many banks have difficulty dealing with them.
You would want to look at credit unions, independent small banks in a rural area, or the version of govt backed rural loan packages that are aimed at these types of properties.
Now some will remark why does the govt support ag loans, free loading off of taxpayers... But if they look at their town house loans, they will find the ultra low interest rates their home has is heavily subsidized by govt backing, they just don't know it.
Anyhow, you need to seek out these other, less common, loans for property not on a city block. The city banks will not know how to deal with your rural setup.
Paul
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08/08/13, 03:02 PM
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Join Date: Jun 2013
Location: Dayton ohio
Posts: 42
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Thanks for the help looks like I have a little searching to do for a bank.
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08/08/13, 04:08 PM
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Join Date: Jul 2010
Location: Watertown, Tn.
Posts: 2,115
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What's your idea of a farm?
With normal financing like Conv. and FHA, It's what norm for the area as far as acreage goes.
I closed a loan with a house and 80 acres using Fannie Mae.
U gotta have comps!
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08/08/13, 04:20 PM
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Join Date: Jan 2008
Posts: 2,635
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Find a locally owned bank and talk with them about financing a farm. The big box banks typically do not loan on farm ground unless you talk with their Ag Financing Divisions.
The mortgage on our home farm is held by a local, three branch bank.
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08/08/13, 04:58 PM
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Join Date: Jun 2013
Location: Dayton ohio
Posts: 42
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The property were looking at is 10 acres in pasture, It has 3 out buildings and the house. So not a huge farm by any means but big for us going from 1/10th an acre.
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08/08/13, 07:28 PM
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Living the dream.
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Join Date: Oct 2005
Location: Morganton, NC
Posts: 1,982
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If the normal banks give you a hard time or quote rates significantly higher than a normal mortgage, see if you can find a Farm Credit office. That is what they do and rates are only a little higher than a regular mortgage. If I had known about them sooner, I might have a bigger place now.
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08/08/13, 08:22 PM
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Join Date: Nov 2007
Location: East Texas
Posts: 1,125
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With just 10 acres, you should be fine getting just about any loan. Its when the majority of your loan is the land value that you have problems. Our farm is 60 acres and a small house. The house value only comprised 1/6th of the total loan amount. Made it VERY difficult to get a loan. Most of the big AG banks didnt work in our county. We ended up having tto go with a small local bank who was going to keep the loan in house, had to put down 20%, and had to take a 5yr ARM. Im still trying after 4 years to find someone who will refinance us on a fixed rate.
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08/09/13, 07:29 AM
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Join Date: Dec 2012
Location: Ky
Posts: 83
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Totally depends on your area and what lending is available...
this company is in our area and we just used them for a farm purchase...
http://www.e-farmcredit.com/
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08/09/13, 08:04 AM
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Join Date: Oct 2011
Location: North Central Kentucky
Posts: 204
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I used Farm Credit Service also. They will loan on land only, one of the few places that do. At the time they wanted 20% down, and since the one I bought had a house on it the home had to appraise for a percentage of the total loan, which if I remember was about a third. I think I got a 25 year loan on a fixed rate. The USDA rural development loans are geared more towards getting people to move to rural areas to improve the tax base....it can be for houses in subdivisions etc as long as the area meets the USDA criteria. They really dont seem interested in loaning money on an existing farm because that doesn't increase the tax base. At least that's what I went through at the time, not sure if that's still the case today and they probably don't have any money to lend anyway. Good luck.
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08/09/13, 12:09 PM
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Join Date: Jul 2013
Location: southern hills of indiana
Posts: 2,533
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lotta' good replies here but i would like to add that if you go to the local banks they will have a lot on insight into the individual property and many times they will give you a heads up but you'll have to be observant. Thinks like" oh ya i know the propriety,that's the place mr. jones had all the trouble with meniral rights.Or in casual conversation it may come out that 25 acres on the next road over is priced about the same as you are p aying. Just a though as i have seen these things happen before.
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08/09/13, 04:33 PM
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Join Date: Feb 2005
Location: Kentucky
Posts: 3,232
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Quote:
Originally Posted by ATPFARM
Totally depends on your area and what lending is available...
this company is in our area and we just used them for a farm purchase...
http://www.e-farmcredit.com/ |
This is who we have our loan with. BTW, there are different rules depending on how many acres you're buying. Here, we needed to purchase more than 15 acres to get a break on some of the requirements. Good luck!
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08/09/13, 10:39 PM
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Join Date: Jul 2013
Location: Mountain Home, Arkansas
Posts: 2,550
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Is each state or area different? I looked at the link but didn't really find enough information. I am definitely interested in this and a farm has always been my dream. I grew up on one and helped on others. I am getting close to my golden years and that's how I want to live the rest of my life.
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08/09/13, 11:10 PM
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Join Date: Oct 2011
Location: North Central Kentucky
Posts: 204
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Doug,
Not sure how much variation there is at different locations, but I'm sure there's some. There's some FCS locations in your state, http://www.myaglender.com/ is but one of them. They have some special programs for new farmers that might interest you. I'm not advocating them as there are other sources of financing for sure, but I went through the whole local bank deal etc, etc and didn't have much luck in my neck of the woods. I bought 60 acres, house, and some outbuildings. Like you, I didnt want to wait any longer.
WWF
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08/09/13, 11:13 PM
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Join Date: Jul 2013
Location: Mountain Home, Arkansas
Posts: 2,550
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I just sent a long email to the local office. I'll check this out too. I'm hoping for 100 acres and house is optional. My wife wants modern and nothing is modern here in north central Arkansas. Lol
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