Tag Archives: farm loans

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.

5 Things to Know Before Applying for a Land Loan

Things to Know Before Applying for a Land Loan

The process of buying land can be a long, difficult, and ultimately stressful road. Buying your dream property, whether it is simply recreational land, farm land, or ranch land does not have to immediately start as overwhelming. In fact, just a little bit of research beforehand can make a huge difference. Here are 5 things you should know before applying for a land loan.

1.) Ask Yourself…Is Now the Right Time?

Before even attempting to dive into the process of buying land or applying for a land loan, you may want to ask yourself is this the right time? We realize this question can go two ways. One, are you ready to buy land? Is it the right time in your life to buy the land of your dreams? Do you have the finances to handle it? The second way this question could steer is “Are we in a good time to buy land?”. We get these questions might go beyond your expectations. That’s why we are here to help you in the process. Click ion the blog below to look over some things to consider when it comes to these questions.

When is the Best Time to Buy Land?

2.) The Fundamentals of Land Loans

The second thing you should know before applying for a land loan would be essentially the fundamentals. These fundamentals are simply need-to-know items when you are starting the process. Take a look at the fundamentals below.

  • Why are Land Loans so Hard to Obtain? – Answer: Land loans are simply hard to get because of three reasons. 1) Land loan lenders are limited in number compared to home loan lenders. 2) Few land loan lenders specialize in land loans and only land loans. 3) Land loans are in nature riskier loans.

Learn More Here

 

  • Should You Get Pre-Approved? – YES! Coming to a seller with a preapproval for financing can allow you to negotiate a lower buying price. Why? When a seller knows the buyer has guaranteed financing, he knows the closing process will be faster and smooth which ultimately puts the money in the pocket sooner. The guarantee of a quick closing with a guarantee of money to a buyer usually justifies a reduction in price.

Learn More Here

 

  • Why Do Land Loans take so Long? – The average time needed to close a land loan is 4 weeks. This answer can vary tremendously, however, based on several different factors. These are the pre-approval process, appraisal time, title work, and continual communication between the borrower and land loan lender.

Learn More About These Factors Here

 

  • Land Loan Down Payments – When looking for a land loan and trying to determine what you might need for a down payment you can typically expect a range between 20% to 40%. Each land lender has different parameters, but we have listed 3 key factors that usually hold the most significant value to land lenders when determining what you may need for a down payment on a land loan. 1. Repayment capabilities 2. The appraisal and/or purchase value 3. Collateral value from land already owned

Learn What is Required For a Down Payment Here

 

  • Land Loan Interest RatesLand loan interest ratesare 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.

Understanding the Rates

3.) Your Loan Options

The third thing to know is that there are different types of loans to obtain depending on the property you wish to buy. The land loan also depends on what you plan to do with the property. The plan is vital as you can assess whether or not the land you’re inquiring about meets your needs. In this step, a land loan officer can help walk you through the process.

 4.) Choose the Right Land Loan Officer

Choosing the right lender for your farm real estate purchase may be one of the most important decisions you make. Each loan is unique to its particular circumstances and people involved. There are many types of farm loan products that can be structured to fit someone’s needs. There are many elements to consider when making a farm real estate purchase. It could well be one of the largest investments you ever make! In the blog below we have listed 8 things a land loan officer should do. Check them out!

8 Things Your Land Loan Officer Should Do

5.) Have a Plan

Knowledge is power, and power is negotiation. When you are seeking a loan for land, it helps to have a clear plan, or business plan in place. “Lenders want to know just two simple things. One, How much money you want, and two, will you pay them back?” (Beef Daily, 2017). The article below by Amanda Radke “6 Components of a Strong Ranch Business Plan” summarizes advice on smart financial planning given by Dr. Curt Lacy, Mississippi State University’s Delta Research and Extension Center professor.

We hope you found this article helpful and informative. Here at Land Loan Specialists.com, we pride ourselves on being experts in land acquisition from the beginning to the end. Once the qualification part of the lending process has been established, we will take care of ordering the appraisal and obtaining title insurance on the property. Whether you have chosen that special piece of property or your still in the looking process, please visit our website at www.landloanspecialists.com.

Get Started Here

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!