Don't give up the rewards far outweigh the issues your having. :thumbsup:
Rural Mortgage
- Thread starter ericrm2005
- Start date
- Views: 6395
Don't give up the rewards far outweigh the issues your having. :thumbsup:
dmccarty
Super Star Member
We had similar issues when we bought our land. The Credit Union did not want to loan money on land that was much over 15 acres. They really wanted fiveish acre lots. We ended up with a bank that allowed us to buy the land but it was a commercial loan not a house loan.
When we went to build, we got a construction loan, on a fiveish acre lot while the remainder acreage was in the commercial loan.
I think your problem is the house AND the land. A farmer would just be buying land and not a house. The house likely falls under a Federal rule/regulation for the mortgage. If you go bankrupt, a house and large chunk of land is harder to sell than just a house.
Try your state Extension office for information. NC has a pretty good website and the folks at the county office are very friendly and helpful. If there is a Farm Bureau in your state they might be worth a try as well.
Later,
Dan
When we went to build, we got a construction loan, on a fiveish acre lot while the remainder acreage was in the commercial loan.
I think your problem is the house AND the land. A farmer would just be buying land and not a house. The house likely falls under a Federal rule/regulation for the mortgage. If you go bankrupt, a house and large chunk of land is harder to sell than just a house.
Try your state Extension office for information. NC has a pretty good website and the folks at the county office are very friendly and helpful. If there is a Farm Bureau in your state they might be worth a try as well.
Later,
Dan
karverind
Member
1st farm credit services. They are great. That is all I have to say.
MotorSeven
Elite Member
The banks use any excuse to pork you into a higher interest rate...I call "Horse Apples". Around here Farm Credit is the only place to get a loan on acreage and recenty they have become pain in the arse. The pendulum has now swung the other way and it's like pulling a tooth without even a shot of whiskey to get a loan.
And don't get me going on their "non conforming" building clause that ups the interest rate by at least 2 points. Arched steel, 120mph wind rating, termites cant' touch it....argggg
And don't get me going on their "non conforming" building clause that ups the interest rate by at least 2 points. Arched steel, 120mph wind rating, termites cant' touch it....argggg
laurelrun
Member
Eric,
We had the exact same issue when we bought our property (26+- acres of woods with a tiny house and several out buildings) at the height of the real estate boom. Things are a bit different now, but our issue was the appraisals. Standard real estate appraisals depend on nearby comparable property sales. When your property has no comparison, the mortgage guys balk, and it's only gotten tougher.
Ag Choice is a good start. We used an independent broker who made it work for us and also a few friends with similar properties. If you'd like, send me a private message and I can give you a contact name and number.
For everyone's benefit, what we had to do was a second loan to cover the gap between the appraisal and the purchase price. We've since refinanced and gotten rid of the second loan. Second time around, the same broker found us a lender who didn't ask for an appraisal - not likely today.
Bottom line today, if it doesn't fit the box (i.e., standard development home exactly like 20 others that sold nearby), most lenders won't go there. And those that do will charge a premium rate. Just bare in mind, "premium" rate is still going to be significantly below the historical average.
We're at 4.9% now, and I'd love to refi again to get these sub 4.0 rates, but I just don't think we'd get a lender to bite.
We had the exact same issue when we bought our property (26+- acres of woods with a tiny house and several out buildings) at the height of the real estate boom. Things are a bit different now, but our issue was the appraisals. Standard real estate appraisals depend on nearby comparable property sales. When your property has no comparison, the mortgage guys balk, and it's only gotten tougher.
Ag Choice is a good start. We used an independent broker who made it work for us and also a few friends with similar properties. If you'd like, send me a private message and I can give you a contact name and number.
For everyone's benefit, what we had to do was a second loan to cover the gap between the appraisal and the purchase price. We've since refinanced and gotten rid of the second loan. Second time around, the same broker found us a lender who didn't ask for an appraisal - not likely today.
Bottom line today, if it doesn't fit the box (i.e., standard development home exactly like 20 others that sold nearby), most lenders won't go there. And those that do will charge a premium rate. Just bare in mind, "premium" rate is still going to be significantly below the historical average.
We're at 4.9% now, and I'd love to refi again to get these sub 4.0 rates, but I just don't think we'd get a lender to bite.
laurelrun
Member
Forgot to mention... in Pennsylvania the plus to having 10+ acres is the real estate tax abatement available by restricting development. I am sure other states have similar "Clean and Green" programs. Our tax savings after enrollment far outweighs the premium we pay on the mortgage. We pay far less in taxes than on our old development home.
dodge man
Super Star Member
I am a land surveyor and I get a call about once year from someone that is trying to buy a piece of ground with a house and the bank wants them to split the house out from the larger tract of ground. It seems like they will loan money on it but want to be able to be able to foreclose on the house and take that back as a seperate parcel since it would be easier to sell that way. It doesn't make a lot of sense to me since the prices of rural land, be it tillable or not, has really risen in this area that last 10 years.
Last edited:
ncnurseryman
Gold Member
I've had the same experience in NC with Carolina Farm Credit. I want to move to the nursery land but the bank only wants to give a residential loan if I sub-divide out no more than 10 acres and keep the rest of the property under the existing commercial loan. It's a big hassal.
windy acers
Silver Member
FIND A LOCAL SMALL SAVINGS AND LOAN BANK THAT DOES NOT SELL THE LOAN AND KEEPS "IN HOUSE".CALL AROUND AND ASK,IT WILL COST A LITTLE MORE BUT GO WITH IT.AND in a year or two RE SEUVEY MAYBE DOWN TO 5 ACERS INCLUDING THE HOUSE. THAT WAY IF YOU FINANCE AGAIN THE HOUSE AND 5 ACERS WILL BE WORTH MORE AND YOU CAN GO WITH A MORE NORMAL "CONFORMING LOAN" that can be sold on wall street. THIS IS WHAT I DID AND NOW OWN THE LAND WITH OUT THE HOUSE FREE AND CLEAR.
Western
Super Member
I was told by a friend of my dads that is a mortgage broke,r that most M companies want a 60-40 ratio in value, 60% home-40% in real estate. That was a couple years ago, as the market was starting to drop. He said land doesn't sell quick compared to a small lot with a home.
