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PinkMartini
Mar. 25, 2012, 12:44 AM
I have plans for it to be a hobby farm. Right now it is listed under $100,000.

I've thinking that a place that specializes in rural/farm homes would be better that a 'regular' lender? Or am I just speculating and going to cause myself more headache?

spotmenow
Mar. 25, 2012, 12:55 AM
By all means give them a try and if the place is listed well below its actual market value due to foreclosure or something similar, they may be able to help you. However, every time we've contacted them (Farm Credit East) they have been a big disappointment.

First, they want $1000 to do an appraisal (standard bank appraisal in our area is between $350 and $400). Then, they have a strange loan-to-value ratio; I believe they were willing to finance a maximum of 80% of the "adjusted" appraisal amount, which came out to be only 70% of the purchase price. We ended up going with a regular bank as a result. That was five years ago.

We just recently contacted them about possibly financing our indoor and they wanted $5,000 in loan origination fees and then were only willing to finance 60% of the actual building cost. Once more, we went to a regular bank. Good luck to you!

spacehorse
Mar. 25, 2012, 08:49 AM
I am finding these things out the hard way. Most traditional mortgage lenders will not finance a 'farm'. It may depend on your acreage. Less than 10 and you may be ok.

We have been exploring options for 60+ acres, and no one will touch it but farm credit. And I don't even want to talk about the rate...:eek:

This is our only option.

My Two Cents
Mar. 25, 2012, 08:50 AM
We found Farm Credit in our area to be very helpful. They beat the bank financing by quite a bit. I'm sure it depends on the people working at a particular office as to how knowledgable they are.They are also a co-op so there have been dividends to help offset some of the other costs. They also work with the Begining Farmer loans.

SkipHiLad4me
Mar. 25, 2012, 09:29 AM
None of the traditional lenders here would deal with us on a recent house we were looking at because it was on 14 acres of land. Apparently, anything over 2-3 acres of land is a no go for most lenders these days. We were even paying cash for half of the asking price and they still weren't willing to finance the remainder for us.

We spoke with Farm Credit and they were willing to finance it without issue. Their rates are higher than the going market rates though because they finance "in house" and are taking on more risk by doing so. Even so, I think a 30-yr mortgage had a 5% interest rate, which isn't horrible but seems high now that we've gotten used to the rock bottom interest rates that have been out there the last few years. A 10-15yr mortgage had more competitive rates though. We couldn't come to an agreement with the seller so I can't comment on how Farm Credit was to work with on appraisals and closing. Good luck :yes:

Tamara in TN
Mar. 25, 2012, 09:33 AM
Farm Credit is hands down the best.

Tamara

ReSomething
Mar. 25, 2012, 10:36 AM
We used Farm Credit also, just for a bridge loan. Rates are a little higher, you have to join the Co-op, which was a grand for us, but we had no other oddball fees and none of the same last minute cr*p we had gotten during three previous adventures in financing homes.

shakeytails
Mar. 25, 2012, 11:51 AM
I love Farm Credit! Without them I never would have got this farm. They didn't require all kinds of appraisals (I don't even remember a charge for appraisal), didn't even need a new survey-and you should see how my deed reads! Interest rates are awesome- every few years it seems they sent me a letter to do a "loan conversion"- basically for a fee they drop the interest rates. I've got one mortgage at 4.3% and the other at something ridiculous like 2.9%. They were a little tougher on me a couple of weeks ago when I needed a loan for a new-to-me truck, but I don't make as much as I used to as I'm recovering from 2 years of unemployment/going to school and a new career. But I still got the loan.

Bacardi1
Mar. 25, 2012, 03:50 PM
I love Farm Credit! They didn't require all kinds of appraisals (I don't even remember a charge for appraisal), didn't even need a new survey-and you should see how my deed reads!

While I'm glad you got your loan, I find them not requiring a new survey more than a little scary. And a new survey would most likely have been required for a title search. Did they do a title search? You wouldn't BELIEVE how a little money-saving detail like this can come back to bite you in the butt big-time down the road. Particularly if you, or any of your adjoining neighbors, decided to sell.

Guilherme
Mar. 25, 2012, 03:52 PM
Farm Credit is hands down the best.

Tamara

Except for AgCredit!!! :)

FarmCredit is a specialized lender, chartered by the U.S. Their charter imposes upon them some VERY strict limits on what they can finance and how they can do it.* They also pay more for their money than banks or credit unions. This means you'll pay a highter interest rate than you'll get from Intuit or Bank of America.

On the plus side they are not afraid of loans which will be secured by a large amount of vacant land. They'll also finance equipment, livestock, seed, etc. that will send a commercial banker scrambling for cover. But, again, because they pay more for their money and they have a higher risk of loss the borrower pays a higher interest rate.

I'm a member of Chattenooga AgCredit Association, an agricultural financing co-operative. It's about as good as it gets for service. But I pay at least two points more than I would for a loan from a commercial bank (if one would even write me a loan). One up-side is that I'm a shareholder in the Association and in good years I get a "patronage refund" which is based on how much I paid in interest. Until things went south in '09 I got two per year. Since '09 the Co-Op has been aggressively building its capital base against losses** and I've only gotten two, I think, in three years.

We're not very big, but I've never been happier with a financial institution.

Another possible financing source for small acreage is your local credit union. At least two our our local credit unions will make loans on bare land, the rates are competitive, and they don't sell the paper. Their fees will mirror the banks in most cases (meaning that they may not be cheap) but you do get local management.

Shop around. This is a specialized loan area and not everbody knows what they are doing.

G.

* AgCredit is limited by charter to 85% of appraised value. Their appraisals are done "in house" and are conservative. As an aside, if more mortgage lenders had done this in the "go-go" years of the mid-decade we would not be in the economic pickle in which we find ouselves.

** Per the Annual Report, one of our borrowers defaulted on a $500,000+ loan. It was dairy farm, IIRC. Since the farm's bankruptcy is still open we don't know how much we will lose. We have had very few forclosures, and that's at least in part due to the very conservative approach of the Association. That kind of sucks for borrowers with poor credit, but it's Good News for us shareholders. While actual losses are (outside the Big One) are few, they still could happen. That's why the Board of Directors is hoarding cash.

shakeytails
Mar. 25, 2012, 04:55 PM
While I'm glad you got your loan, I find them not requiring a new survey more than a little scary. And a new survey would most likely have been required for a title search. Did they do a title search? You wouldn't BELIEVE how a little money-saving detail like this can come back to bite you in the butt big-time down the road. Particularly if you, or any of your adjoining neighbors, decided to sell.

I know I paid for title insurance. Same thing? The properties adjacent have been surveyed, and the survey stakes are all on the line fence, so I figure all is good.

IronwoodFarm
Mar. 26, 2012, 12:10 PM
I am with Shakytails. I LOVE Farm Credit. I've been a "shareholder" since 1998.

As others have mentioned, the size of the property is going to determine where the financing originates. Residential lending that we are most familiar with is actually very limited. It is absolutely true that Farm Credit will require a larger down payment and has rates higher than your residential rates. But then again, you're not going to get financing from a residential lender, so it is a moot point. I do love the fact that I can refinance via Farm Credit (they call it a conversion) and drop the interest rate without changing the term for $250 a conversion. Mr. IF and I have taken advantage of conversion a couple of times. And I love the dividends that basically equal a monthly mortgage payment that I get every year. I wish my residential loan did that!

I had a really great experience with Farm Credit during the 6 months before I bought my farm. I had a number of chats with my loan officer and really got an education as a result. She was wonderful to work with and patient with all my dumb questions. So yes, I think that Farm Credit is well worth talking to as part of the purchase process.

quikchik
Mar. 29, 2012, 02:31 PM
Farm Credit appraisers tend to know a little more about farm appraisals, we felt their appraiser was more accurate than a previous one. When we refi'ed due to rates dropping, they did not require another appraisal, and cut alot of the fees.

tle
Mar. 30, 2012, 11:10 AM
I've worked with Farm Credit and my current farm is now with them. Initially, for whatever reason, they were hesitant to do my loan. Some possibilities were that because they are a private lender (don't sell on the open market ala Freddy and Fannie) that at certain times they may not have the cash to lend and therefore their requirements become stricter. They do have more latitude overall though because tehy are private so financing "odd" property works better with them. My farm is anything but your normal suburban property and Farm Credit's appraisers and loan officers could see more value in the property than Joe Schmoe who never steps foot outside the manicured lawns of suburbia.

That said, their rates are typically just a bit higher. But honestly... well worth it in the end. Even after all my issues last year with them in trying to buy this place, I have nothing really but great things to say about Farm Credit.

DiablosHalo
Mar. 30, 2012, 12:53 PM
I just got a very large mortgage through Farm Credit. They were very generous! I love them.

dotneko
Mar. 30, 2012, 04:27 PM
Love Farm Credit East. We have used them forever. The two hefty checks in Feb and May are pretty nice, too. Ours is
two mortgage payments worth.
We are now discussing a solar array for our barn roof with them. Will let you know how that goes.

Sparky Boy
Mar. 31, 2012, 04:34 PM
The secondary market doesn't want anything to do with a farm and the bank appraiser told us a 6 yr old 144x66 indoor arena was in his words "worthless". :eek:

We went with farm credit. They have in house appraisers that know what they are doing. It was painless. I think we are a percent higher that the current low rates and we had to give them a thousand for stock. I think you get that back when you pay off the loan though.

Unbound
Apr. 2, 2012, 09:21 PM
We just financed our 14 acre farm in TN with Farm Credit. They were great to work with...even our local credit unions wouldn't touch the 14 acres we were looking at (most of them only "allow" 10 or less acres), and even with a 112 year old home on the property that really isn't worth a lot, they still financed it as a mortgage. Great rate (less than my mortgage on my previous house, which was already low), and easy to deal with. I'm very pleased.

Good luck!