In over thirty years of financing agricultural I have originated farm loans, agricultural land loans, Ag Land purchase loans, and dealt with a host of Farm Loan Programs. Some of which have been government programs and others programs we have established in our bank. In the banks I was affiliated with the farm loan programs were the most popular.
Most of the long term agricultural land loans before the late 1980s were originated by the Federal Land Bank and some Insurance companies. Then during the farm crisis of the late 80s Farmer Mac was started. The purpose was to be able to poos and secure ag land purchase loans and sell just as Fanny May was doing with home loans. Now the Federal Land Bank is known as Farm Credit Services and is making long term agricultural land loans, along with Farmer Mac, and some insurance companies.
Interest rates tend to be usually 2 or maybe more points higher for these commercial farm loan programs. The rates would be on a par with other commercial long-term loans. Long term loans would be defined as loans with an amortization of 25 years or more.
The Agricultural Banks would be primarily in the rural areas and tend to be smaller banks. However, with the amount of money needed by these larger farming operations these small banks sometimes must rely on larger city banks to assist them with the farm loan programs.
Financing farmers and agricultural enterprises is challenging for agricultural banks. Getting adequate security on farm land loans is not difficult as you can take a mortgage on the land and be secure.
However, getting a secure position while financing livestock, machinery, and growing crops is more difficult. Unlike automobiles large pieces of equipment do not require titles that you can hold. You only must rely on serial numbers posted on the equipment etc.
Financing agricultural with various forms of agricultural land loans, farm loans, and ag purchase loans has been challenging over the past 30 years but enjoyable.
With the refinance craze that has swept the country for the past few years many people have gotten caught up in the hype surrounding these types of loans. But before anyone decides on getting a home equity loan it is a good idea to look at the pros and cons of doing so. Getting a home equity loan is a serious financial decision and as such needs to be thoroughly researched so that you, the borrower, know the ramifications. Probably the first thing that you need to be aware of is that a home equity loan is, in essence, a second mortgage on your home, and as such carries all the terms and conditions of a first mortgage.
On the pro side, there is a definite upside to getting a home equity loan. The obvious thing is that you will get a large infusion of cash that you can use for just about anything you want. Once you have signed the papers you will probably receive your check after the closing of the loan is completed. Once the check is in your hand you can use that extra cash for remodeling your house, buying a new car, paying off credit card debts or even invest it and try to make more money. You will also be able to deduct the first one-hundred-thousand dollars of interest on your income tax returns, which can be a large tax savings for you.
You will also have to weigh the disadvantages of getting a home equity loan as well. You must be certain that you can make those monthly payments, in addition to the payments on your first mortgage. Having two house payments a month can be a strain on many people’s finances, particularly if you or your spouse were to lose your job. You also need to make sure that the market for housing in your area is stable. A sudden housing market drop and even selling your home may not produce enough cash to pay off both of your mortgages.
Many people use a home equity loan to pay off other debts, hoping that consolidating many payments into one will make their financial situation better. While this may look good in the short term you need to weigh the benefits against the long-term interest you would pay on a home equity loan. Sometimes it may make better financial sense to simply pay off your other debts without the added risk of using your home as collateral.
The pros and cons of a home equity loan are many and it is important that you look at both sides of the equation carefully. Don’t be blinded by a large amount of money and what you could do with it. Realize that you are putting your home up as collateral and if for some reason your financial situation takes a turn for the worse your home could be taken away from you. Weigh the pros and cons of a home equity loan carefully before you make your final decision