Re: OT Any mortgage smarts people out there?

Posted by James22 on August 11, 2007 at 12:38:43 from (207.179.221.35):

In Reply to: OT Any mortgage smarts people out there? posted by Dave H (MI) on August 11, 2007 at 07:33:15:

A lot of potential problems in getting a farm loan. As other have said, many institutions really only give house loans, because they can sell it to Fannie-Mae and Freddie-Mac, These huge government charted funds, enable housing loans to be cheaper but they do not take farms loans. Land contract or similar financing by the previous owners is almost non-existant, unless you are a close friend or relative. Another possible reason would be if they are having a tough time finding a buyer. Personally, I would have to be under great duress before I would finance a stranger. Although I had/have a good credit record, no house mortgage therefore a positive net worth, and a confortable income, it was not always easy to get a loan. I always seemed to find farm loan institutions that required a 1/3 down payment. At the beginning it was a little tough coming up with a 200K down payment for a larger land acquisition. Assists were OK as collaterial in leu of all cash, but I didn't want to mortgage the house because of the children, and they wouldn't consider any retirement funds; ie, 401K or IRA's. It basically limited any early advances to small purchases, which I could later mortgage for large pieces. The problem is this takes time and requires planning many years in advance. The lending institution's parsimonious attitude was the fallout from the late 70's early 80's ag crisis. The farm owners walked away, and stuck the institutions with expensive land. The alternative was for the institutions to give massive loan buydowns, which resulted in huge losses. The lending criteria relaxed several years ago to a 20-25% downpayment because of the improving farm economy, but the recent sub-prime lending crisis has thrown a wrench into the works.
I believe looking for a seller backed mortgage would be similar to finding a needle in a hay stack, unless he/she takes an unexpected liking to you and/or can't find a buyer. But it doesn't hurt to ask, just plan on being disappointed. A better plan is to do some serious scouting for a bank that has the best terms for farm loans. Use these terms to evaluate possible scenarios; eg, no house just farm ground; house and 5 acres with adjacent farm purchase etc, to determine what the bank will support. However as always, any plan that would insure winning the lottery without spending most or all of the winnings on tickets, would work pretty good too.

Replies:

• Re: OT Any mortgage smarts people out there? Kentucky Ed 13:59:16 08/11/07 (1)
  • Re: OT Any mortgage smarts people out there? James22 15:39:12 08/11/07 (0)

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