Tag Archives: buying a farm

2018 Outlook for Farm Loans

As we wrap up 2017 and turn our focus to a new year, many of us begin to wonder what the economy will do and what will interest rates will look like in 2018. Many experts are scratching their heads at this question, with most of us having expected rates to be higher today than they are. In fact, today’s 10 Year Treasury note is actually two basis points lower than rates from January 2017. The Fed is forecasting three, and possibly even four, rate hikes in 2018. It is hard to say for certain at this point though, as Janet Yellen finishes her term and Jerome Powell prepares for his new role as Fed Chairman.

Land Loan Specialists has once again seen positive growth in our loan portfolio as demand for capital continued through 2017.  The demand for borrowers with a strong financial position and adequate cashflow is back.  Not that it ever really left for these types of borrowers, but it has once again become competitive in the marketplace for these types of credits.

Certain traditional ag producers are feeling the pinch of cashflow struggles as their inputs have remained fairly constant while the value of their commodities has retraced.  Those with nonfarm income continue to subsidize their operations both for capital debt requirements as well as other operating expenses.  We continue to see those operations that are profitable find ways to add value to their product.  Should rates increase .75% to 1% over the next year these operations that are struggling will see themselves in a situation they may not be able to overcome. Their liquidity is already tight and debt servicing requirements will be impacted by these increases.

  • Federal Reserve is forecasting 3 rates hikes in 2018.
  • Inflation in the low 2’s will continue to slow these hikes.
  • Profitable operations find ways to add value.
  • Build liquidity as opportunity will present itself.

When is the Best Time to Buy Land?

When is the Best Time to Buy Land, Farms, or Ranches?

Is now a good time to purchase that piece of property you have always wanted? When is the best time for you to apply for a farm loan? When is the best time to buy land? As the leading property mortgage lender in Oklahoma Land Loan Specialists provides land loans, farm loans, ranch loans, recreational land loans, hobby farm loans and raw land loans. With LandLoanSpecialists.com, you will receive free pre-approval, low long term rates and experts with answers to all of your land loan questions.

Best Time To Buy Land?

Before you come to us to purchase your dream property, here are a few things to consider while you are looking:

The Beginning Farmer and Rancher Act of 2013 may be a perfect fit for you. If you are thinking about applying for a farm loan or ranch loan, you may qualify for assistance under the program.

What about running your own equestrian facility or peach orchard? Those qualify for an agricultural mortgage. For more information about it, you can contact us at landloanspecialists.com. We are here to help you fulfill your dream.

Intrested to learn more about land loans? Check out our information on Land Loans 101!

If you already own a farm or ranch and want to expand or improve your business, a ranch loan may be perfect for you. Unlike most lenders, we don’t run through a lengthy and expensive refinancing process. landloanspecialists.com can help you organize your finances and paperwork to get your loan quickly and easily. Whether you are buying a farm or ranch, expanding your existing operation or making long-term improvements to your property you’ll find a wide variety of mortgages with the most competitive rates in the state. We have competitive rates on our refinancing programs, too.

Farm loans and agriculture loans can be a little harder to obtain simply because there are not as many agriculture mortgage companies as there are residential mortgage companies. Also, the risk of default is statistically higher than residential loans. Finding a good agriculture mortgage company is key and landloanspecialists.com is the first company you should call to get all of your questions answered when seeking out your land loan. Becoming a farm or ranch owner is both exciting and rewarding. It can also be a great investment for you and your family to enjoy for many years to come. A land loan does not have to be a hassle or difficult as long as you find the right agriculture mortgage company. In Oklahoma landloanspecialists.com has helped many people succeed in obtaining ag loans and they are here to help you too. Give us a call today!

If you wish to get started now, check out our land loan calculator!

What Does LTV Stand for?

Loan to Value | What Does LTV Stand for?

Land Loans

What does LTV stand for? What does it mean and what priority does it hold to my land loan?

The term LTV stands for Loan To Value, it is very important in determining if you can qualify for a land loan. LTV represents the amount of loan against the property versus the appraisal value or purchase price. It is represented in percentage form.

For example, land is purchased for $1,000,000. The actual land loan amount is $700,000. To find the LTV , simply divide $700,000 by $1,000,000. This puts the loan to value at 70%.

 

However, some land purchases could be higher than what the appraisal will represent as a value. In that case, the L.T.V. will be determined on the appraisal value. For example, land is purchased at $500,000. The appraisal valued the land at $450,000. A down payment of $100,000 was put down leaving a $350,000 land loan. The L.T.V. is then determined by dividing the $350,000 by the $450,000 appraisal value instead of the purchase price of $500,000. This L.T.V. is then at 77%

 

A standard loan to value accepted by most land loan lenders is between 60% to 80% for land loans. This is extremely important to land loan lenders. This provides the lender with a guarantee of value to the money being loaned for that land. There are definitely other very important factors other than L.T.V. that determine qualification for a land loan, but knowing and understanding L.T.V. will make your land loan process much easier.

 

This explanation answers the question of what does ltv stand for and much more. LandLoanSpecialists.com provides land loans, farm loans, ranch loans, recreational land loans, hobby farm loans and raw land loans. With LandLoanSpecialists.com, you will receive free pre-approval, low long term rates and experts with answers to all of your land loan questions. Please visit our website at LandLoanSpecialists.com and contact us by calling 1-888-744-4524

Want to get started on a land loan? Check out the land loan calculator to get a better idea on where to start!

Land Loan Interest Rates | Understanding The Rates

Understanding Land Loan Interest Rates

Land loan interest rates are charged to a borrower and can be described as the cost of borrowing money.  It is the farm or land loan lender’s compensation for servicing a land, farm, or ranch loan and bearing the risk of lending.  The land loan interest rate is the borrower’s cost for the ability to spend now, rather than save the money and make a purchase later.  If a borrower had to wait until they saved the money for the purchase, they would often have to defer opportunities that could possibly generate future cash flow.  The ability to borrow money and have it now also allows borrowers to take advantage of opportunities that are currently available that may not be available in the future.  Many times, the interest a borrower pays to obtain the money now is less than the cost of forgoing a missed opportunity.

Many factors affect the land loan interest rates on a real estate loan: length of the note, type of loan product, collateral offered as security, repayment ability, supply and demand of credit, and the government’s monetary policy. While we have very little control over government and economic activity, there are a few factors that a borrower should understand.

Land Loan Interest Rate Factors

1)      Maturity Date  The longer period of time between the origination and the maturity of the farm or land loan will cause the loan interest rate to increase.  This is partly due to the time value of money and inflation.  The dollar will presumably buy less in 20 years than it will today.

2)      Loan Product  Interest rates vary with the type of farm loan product a borrower obtains.  Loan products can have a fixed, adjustable, or variable interest rate.  A fixed rate carries the same interest rate throughout the life of the land loan.  It offers a borrower some stability in knowing that the payment requirements will not change.  An adjustable rate sets intervals in which the interest rate changes, such as every 3, 5, or 10 years.  A variable rate also sets intervals in which the interest rate may change but it can be at the discretion of the lender.  An adjustable or variable rate farm loan product usually offers lower interest rates.

3)      Collateral is what the farm lender uses as security for a land loan.  If a borrower is obtaining a loan for farm real estate, the lender will usually put a mortgage on that farm property to serve as security.  However, collateral offered as security does not have to be restricted to only property that is being purchased.  The farm lender can take a mortgage on land the borrower already owns, in addition to the property being purchased, to serve as additional collateral.

4)      Credit Score  A borrower’s credit score tells the farm lender how the borrower has handled money in the past.  It also tells the farm lender what other financial obligations the borrower currently has and if that might impact the borrower’s repayment ability in the future.

The above factors are just pieces to the overall puzzle when it comes to land loan interest rates.  Each factor alone does not constitute what a land loan interest rate might be set as.  Farm lenders consider all the pieces and how they interrelate to determine the interest rate on a loan product.  The borrower who understands the factors that affect the land loan interest rates will be in a better position to gain the biggest advantage with their borrowing needs.

Want to get started on a land loan? Check out the land loan calculator to get a better idea on where to start!

Utilizing Programs to Enhance and Establish Your Farm or Ranch

Programs and Assistance to Establish, Enhance, and Grow Your Farm and Ranch

In the most recent blog – 5 Ways to Make Money from Land Ownership, we briefly touched on Federal and State Programs and financial assistance programs. The fact is that there are several programs and ways to receive financial assistance from the federal and state levels. Utilizing federal and state programs such as these can be used to enhance your farm and land, no matter what your goal is from your land ownership.

Getting Started

You are either very interested in owning land, or curious to dig into topics surrounding enhancing your farm, ranch, or property, or you have already gone through the process of acquiring the land. If you are still in the beginning stages and starting the process of obtaining land, check out the educational resources below that could help the process along.

Now the Time to Purchase your Farm or Ranch?

Should I Get Preapproved Before Buying Land?

Why Is It So Hard To Get A Land Loan?

The first objective in your land ownership should be to get through the process of buying and owning land as smoothly as possible.  After this, you should outline what your goals of land ownership consist of. Do you plan on starting/running a farm, plan on making money with the land, or strictly wish to use the land for recreational purposes? Whatever the case may be, chances are there is a program available to offer financial assistance.

Popular Programs to Take Notice of

It would take a decade it would seem to put together detailed information on every single program available for landowners to use as assistance.

A detailed list of programs and resources are here: http://www.privatelandownernetwork.org/Grant-and-Assistance-Programs/

There is a wide variety of programs available to dig through no matter what goals you have for your farm or ranch. The overwhelming part of buying land is the step after owning the land. Programs and Assistance to Establish, Enhance, and Grow Your Farm and RanchOnce you own the land there is an immediate rush to get a return up and running in most cases. After purchasing a farm or ranch, however, this can feel very overwhelming. There is a good chance you would like to start building up and establishing the farm or ranch to create returns or get it to the point where you are satisfied with results. Whether you plan on producing crops, grazing cattle, establishing a certified organic farm or ranch,  creating recreational opportunities such as fishing or hunting, or simply wish to enjoy the land for conservation purposes, there are programs that help with every step of the way. The first step is to identify your goals. Ask yourself the question “Where would you like to see your farm or ranch 10 years down the road?”. This allows you to clearly lay out what you want and how to achieve it. You can then start looking into programs that can help get you up and running.

Conservation Reserve Program (CRP)  – land conservation program that has farmers agree to halt production and plant species to promote environmental health and quality in the environmentally sensitive land.

Wetlands Reserve Program (WRP) – Agricultural Conservation Easement Program (ACEP) – what was known as the Wetland Reserve Program is now known as ACEP a program to financially and technically assist private and tribal agricultural land nationwide in protecting, restoring and enhancing critical wetlands. This also spreads across grazing uses related to conservation.

Voluntary Public Access and Habitat Incentives Program (VPA-HIP)- a grant program that helps increase public access to lands for recreation such as fishing, hunting, and hiking.

Biomass Crop Assistance Program – Financial assistance to owners and operators of agricultural and non-industrial private forest land who wish to establish biomass feedstocks.

Farmable Wetlands Program – annual rental payment for enrolled acres that restore previously farmed wetlands and wetland buffers.

USDA National Organic Program – regulatory program that if met with standards, assures your products with the USDA organic seal. “Organic” commitments by land owners is becoming more and more popular and might be one goal you are looking to achieve with land ownership

This barely skims the surface of the available programs out there to help get your farm and ranch up and running after purchase. Financial and technical assistance out of the gate can make a world of difference to get established and start gaining returns and satisfaction from land ownership.