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Farm Mortgage interest question

D

Dave from MN

Well-known Member
I am wondering how some of you have your interest compounded on your loans. Looking at refinaning and there is alot of variance right now on According to banks this is the "norm". Does any one have thiers compounded monthy, weekly, semi annually? Kinda negotiatiing with a couple lendrs and this is now my next negotiating issue. I do not want daily compounded interest.
 
I'm not sure how mine compounds but I never do a loan unless it is a 15 year fixed. Never do an adjustable. If the bank says they can't do that then move on. Plenty of good banks out there that will.

Casey in SD
 
I do not know what mine is but, the longer the compounding period the lower the effective rate.
 
In general the APR rate takes this all into account--the general interest formulas usually always use a monthly basis.
 
Nearly ALL mortgages, loans, etc. written today have interest compounded monthly.

Keep in mind also with today's current low interest rates, the difference in total interest expense over the life of a loan between annual, monthly, weekly and daily compounding is so small as to be almost inconsequential.

What IS important is the APR (annual interest rate)!
 
Ask for the bottom line. What is the total interest of the loan for a given period of time? Easy to get caught up in the details but really matters is what it costs you in the end.
 
All of the banks we have talked to around here will not even do a farm mortgage. I have been with Farm Credit for forty years now, for my mortgage and operating capital. Actually, just operating capital- the mortgage was paid off some time back.
 
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