This article explains one reason why closing a Farm Loan is not as simple as you might think.
Farm Loans – Why it takes longer to finance a Farm Loan than financing a new pickup.
This great question has been asked many times. There are several answers to this question. In this article I will focus on only one area of why it takes longer to get a farm loan than to finance a new vehicle.
This one reason is TITLE!
When you apply for a farm loan the lender will want a title insurance policy to insure their loan is valid and in first lien position. This process usually starts with the farm loan lender calling a title company and requesting a title commitment. A title commitment will show several things: current ownership, any mortgages or deeds of trust owed against the real estate, any judgments or liens against the current owners and most important any cloud on title.
The title commitment can take anywhere from a day to two weeks to complete. A large number of the commitments on any real estate transactions will have problems! This list of problems can include: judgments/liens against the owner, a neighbor had a typo on his deed or mortgage that was filed on your property, the road you are using to get into the property is not really a public road….etc….
Because of all of these problems you could have to hire an attorney to fix these problems and this takes a couple of weeks. So now because of the time it took to get the title commitment and the time it took to get the title fixed you are looking at 4 weeks.
On an auto title you simply sign the back of the title and take to your local tag agent. Your lender attaches a lien on the vehicle and in less than half a day you have your new pickup and loan.
Now I know the questions you are asking: So why not do the same type of transaction with real estate titles???
First Reason: Remember what I said above about the large number of real estate title problems. Farm loan lenders know this fact and want to make sure at the time of the loan all problems are cleared. How many car titles have problems? Other than a lien against the vehicle there are no problems.
This brings up the second reason. The only document that can be filed against a car title is a lien. The list of what can be filed against the real estate title is a mile long from deeds, mortgages, liens, leases, assignments, affidavits, financing statements, releases, power of attorneys, trusts, decrees and the list goes on and on.
All of these possible filings make the title more complex. This in turn causes more time to be spent by a real estate expert to determine how all of these documents affect title to the real estate. Also, the large number of these filings guarantee there will be more problems with wrong names, dates, notaries, typos and legal descriptions.
But one thing you can feel better about. If you do get a farm loan, a farm loan lender will walk you through this whole process.
Or let me put it this way; HE or SHE SHOULD!
Written by Todd P. McCue, Land Loan Specialists
About Land Loan Specialists:
Land Loan Specialists provides land loans, farm loans, ranch loans, recreational land loans, hobby farm loans and raw land loans. Land Loan Specialists provides free pre-approvals, low long term rates and expert answers to all of your farm loan questions.
For more information about Land Loan Specialists please visit our website http://www.LandLoanSpecialists.com or call a specialist toll free 1-888-744-4524.
Todd P. McCue
Land Loan Specialists