Buying land, loan question
- Thread starter Eshoremd
- Start date
rlb165
Member
https://farmcredit.com/state/maryland
I hope you’ll check with these guys. They were great to work with here in KY.
Good luck!
I hope you’ll check with these guys. They were great to work with here in KY.
Good luck!
suburbhunter
Active Member
I bought my place, raw land, in Kentucky around this time last year. I found that raw land loans are 1% higher than a typical home loan and you are usually required to put 20% or more down. The loan length is usually much shorter also, usually maxing out around 20 years. I used a local bank in Ky and got a 30 year loan for raw land with 25% down. This local bank beat what Farm Credit had to offer. The bottom line is shop, shop, shop, for loans and hopefully your find something that will work for you, but Farm Credit is probably a good place to start.
MarkDarvin
Well-Known Member
This is the route I went. I got a 15 year at 5.85% a year ago. Some farm credit agencies also kick back dividends if they make enough money. I supposedly got one, but I haven't seen it in paperwork yet.
The other thing I like is self financing. It's not for everybody, but sometimes it can work and then you just pay yourself (401k loan/life insurance loan). There's a lot to that, so talk to an expert before you go that route.
Scatterlandsfarms
Member
Here in Arkansas I got a 10 year 4.5 percent O down loan on raw land ,,, short term but very workable
dogghr
Well-Known Member
Land with no house typically don't get as good of rates. But like others said, shop. Especially your local guys that understand supporting local economy. Mine was at 4% locked at 15 years.
But let me put this in perspective for you guys that whine of interest rates. When I opened my office in 1981 I was locked in at 16%!!!! And that was a bargain. And most my friends were much higher some at 21% floating loans. Retirees were living off their CDs that were paying 8+%.
But let me put this in perspective for you guys that whine of interest rates. When I opened my office in 1981 I was locked in at 16%!!!! And that was a bargain. And most my friends were much higher some at 21% floating loans. Retirees were living off their CDs that were paying 8+%.
Chainsaw
Well-Known Member
Those were the days my friend!
Sampson
Active Member
Ag preference did a thirty year note with my 20 percent down. That was 11 years ago and it’s almost paid off. I should be down with the loan in three years at most. I don’t remember the interest rate however been to long ago.
Farm service agency in your area more then likely offers a new farmer loan at a reduced rate. I checked into it but they said I make too much money?? Whatever that means. Shop around someone will want your business.
Sent from my iPhone using Tapatalk
Farm service agency in your area more then likely offers a new farmer loan at a reduced rate. I checked into it but they said I make too much money?? Whatever that means. Shop around someone will want your business.
Sent from my iPhone using Tapatalk
weekender21
Well-Known Member
Raw land loans are not competitive with home loans. You're much better off saving up and purchasing land with cash, especially if it's recreational land that doesn't produce income. If you do go the loan route, the farm credit agencies usually have the best rates. Many of the banks that offer home loans won't even give you a loan for land.
Buckly
Well-Known Member
I also lived through 16% car loans and 12% motgage interest. I would much rather have the very, very low inflation we have today than 8-10% on a CD. What amazes me in today’s world of 3% motgage and 0 % car loans is how many credit cards and department store cards are over 21%. I really don’t know how they get away with it. I just bought some tires on a Ford Service card just to get the rebate. I couldn’t believe it when they sent me the card. 23%. On long term investment like land I don’t think you can go wrong with today’s rates.
Whatever they are. Anything between 5-8% wouldn’t be bad at all over time. I doubt rates will ever be cheaper than they are now. For buyers of recreational land now the biggest obstacle would be property taxes. In some cases can be over the price of your loan.
Whatever they are. Anything between 5-8% wouldn’t be bad at all over time. I doubt rates will ever be cheaper than they are now. For buyers of recreational land now the biggest obstacle would be property taxes. In some cases can be over the price of your loan.
MarkDarvin
Well-Known Member
You're ahead of the curve. The rest of us in low land tax states have a mere matter of time before politicians figure out they can take control of our land by jacking up tax rates and forcing us into forestry programs in exchange for tax reductions. I think Wisconsin is already there. Seems like a guy has to give away an acre per 40 every year in property taxes if I have heard correctly.
weekender21
Well-Known Member
Wow, are property taxes really that bad in places? They’re pretty cheap in my area. Perception is reality but I paid 1/3 the taxes on 160 acres last year than I paid annually on a 920 square foot house in CA.
I know loan rates are low compared to the past but an 8% rate doesn’t seem like a bargain when you consider you’re paying more than double the closing price on a 30 year note. In many parts of the country land prices are pretty flat, you definitely want to be sure about your “investment”.
Sent from my iPhone using Tapatalk
I know loan rates are low compared to the past but an 8% rate doesn’t seem like a bargain when you consider you’re paying more than double the closing price on a 30 year note. In many parts of the country land prices are pretty flat, you definitely want to be sure about your “investment”.
Sent from my iPhone using Tapatalk
Taxes are what is stopping me from buying more land. 24 acres and a house is almost 6000.00 a year. My mortgage payment was less per month.
dogghr
Well-Known Member
Wow you guys and your taxes. Killer. On tax note, some states like mine make huge diff if you can specify some ag, at least on paper. My 100 goes from 2000/yr to 80$/yr just by some mowing for hay. I have to fill out an entitlement before each Sept, but its worth trip to accessors office to do so. They even post the deadline in my farming community county newspaper reminding the farmers.
I agree, with a credit score somewhere near 700, I would think 8% rate is really high. Always become good friends with local bankers. They know you pay your bills and they like to make good loans they know won't default even if its not their typical loan. My farm loan was done by banker who I had used for years and by his bank who Never makes vacant land loans.
Back to my old man story of 16% loan, again, sucked up always to my banker, and each time rates dropped, he rewrote loan at bare minimum charge. Finally paid off loan at 12% and that was one hell of a bargain.
Keep in mind also, those interest charges can be used as tax deduction depending on circumstances. Land is expensive but every piece of property I chose not to buy in past years, I kick my ass for not doing so. Typically best long term investment one can have IF you choose wisely, i.e., financial problems, divorce, inheritance from death, etc.
I agree, with a credit score somewhere near 700, I would think 8% rate is really high. Always become good friends with local bankers. They know you pay your bills and they like to make good loans they know won't default even if its not their typical loan. My farm loan was done by banker who I had used for years and by his bank who Never makes vacant land loans.
Back to my old man story of 16% loan, again, sucked up always to my banker, and each time rates dropped, he rewrote loan at bare minimum charge. Finally paid off loan at 12% and that was one hell of a bargain.
Keep in mind also, those interest charges can be used as tax deduction depending on circumstances. Land is expensive but every piece of property I chose not to buy in past years, I kick my ass for not doing so. Typically best long term investment one can have IF you choose wisely, i.e., financial problems, divorce, inheritance from death, etc.
Doe Shooter
Active Member
Use a local bank. Secure line of credit first. My down payment was 25%. Relatively short terms. Remove penalty for early pay-off.
snowracerh
Active Member
My wife works for the farm credit system. Thats the way to go. Unfortunately because she works there, we can't use them for our own lending.
Sent from my SM-G930V using Tapatalk
Sent from my SM-G930V using Tapatalk
