1982vett
Well-known member
kilroy60 said:I'm a little late reading your post. So, here's my advice for what it's worth.
First, there is no way that I would attempt to finance ANY loan for 40 years. The max I would go would be 15. If I couldn't afford a 15 year loan, then I wouldn't purchase this farm. Also, another thing to consider is what the payment would be. I wouldn't want a payment that would be 25% more than my take home pay.
Second, the idea of borrowing equipment is OK for a short period of time. I have a couple of farm friends that we help each other out periodically. However, when it comes to tractors and other equipment, I strongly suggest you have something that YOU can depend on. When it's hay season and you're having to depend on your neighbor to get finished with his equipment or even worse if his were to break down during his cutting, then it could be a bad hay season for you.
Lastly, whatever decision you make, have a budget prior to starting all this and STICK TO IT!! Know what your cost will be for insurance, fuel, repairs, taxes, fertilizer, chemicals, mortgage, etc., etc., and follow it as best you can. $400K for 40 years is a lot of worry for a young couple.
Good Luck.
Certainly sound thinking.
However...
With today's interest rates, if I could make a 15 year mortgage work I'd still look at a 30 year. Simply because the likelihood you won't be able to use someone else's money cheaper than you can now. Just because it's a 30 year mortgage doesn't mean you have to take 30 years to pay it. Double up your payment each month and the excess of interest payment applies to principal which will cut your 30 year loan to roughly 18 years. Should life throw some excessive amount of financial difficulties for a short time it allowed you an option to ease the loan obligation simply by paying the original loan payment.
I've had several term loans that I paid off early. Both were back in the day when a 14.5% loan was a good rate but still more than could be safely earned investing elsewhere.
I've actually have a 3.08% auto loan and a short term 3.18% credit card balance because drawing the funds out of our iras would trigger tax consequences substantially greater than the measly few dollars paid in interest. Another perspective of that is the net arbitrage if the $ last year was about 15%.
Just sayin.