It can't be this difficult...what am I missing

[texasgal0919]

So, my husband and I are young and wanting to take out a loan for a ranch. We have the downpayment, we have the credit scores of 700 or over but we cannot seem to find anyone to loan us money for anything over 5 acres. We are wanting to take out a loan just for the land(and possibly home if there is one on it-if not we are paying cash for a cheap mobile home ot put on it).
Anyway so we go talk to FSA in west Texas and they will note even give us the time of day. These are the people who are supposed to help the young & beginning farmers, correct? They asked us if we had 3 years of managment of a farm or ranch and we said no. I was raised by a farmer and he was raised in Ranching business but we do not have any management as our dads were the managers and we both helped out when we could. We do not want to get our dads to lie about this or anything like that just so we can get the loan.
We just want a little help from someone...someone willing to give us the money to get started out...It is so difficult..we have been to first ag credit, FSA, and our local bank. Our bank said anything over 5 acres cannot be financed through them...ughh

We are moving to SW oklahoma and this is where we are buying the land. We are still in West Texas as we cannot move until we get a loan!
thanks

Edited to add: And another thing, what about working outside of the home while just getting startedi n Ranching. This is a must, right? Well the Ag places said that "Ag loans" are so you do not have to work outside of the home--you can put your time into ranching and you just pay a certain amount every year.

 

[bigbull338]

your problem isnt new.alot of banks now days wont make loans for land at all.no matter what its use.the best thing todo is talk to the banks where your planning on buying the land.talk to the farm credit banks.they make loans to people wanting to buy land.

 

[texasgal0919]

your problem isnt new.alot of banks now days wont make loans for land at all.no matter what its use.the best thing todo is talk to the banks where your planning on buying the land.talk to the farm credit banks.they make loans to people wanting to buy land.

Thank You. I am going to call them Monday. If we have a 50% downpayment it just blows my mind how they can turn us down.

 

[Sir Loin]

Texasgal,
OK,
Step 1. stay away from anyone who has anything to do with any type gov. mort/loan.
Step 2. Go to a commercial bank and talk to them about a mortgage and have them pre-qualify you so you know how much you can spend. This will tell you what size property you can afford.
Step 3. DO NOT tell him you want to go into the cattle business or he will think you are a real nut. Just tell him you want to buy, or build a home with some acreage.
Best of luck
SL

 

[texasgal0919]

Texasgal,
OK,
Step 1. stay away from anyone who has anything to do with any type gov. mort/loan.
Step 2. Go to a commercial bank and talk to them about a mortgage and have them pre-qualify you so you know how much you can spend. This will tell you what size property you can afford.
Step 3. DO NOT tell him you want to go into the cattle business or he will think you are a real nut. Just tell him you want to buy, or build a home with some acreage.
Best of luck
SL

So, will they not ask where the property is located and things about it(acerage ect.). The only reason I was looking into the FSA loan is because the interest rate is 4% versus the 6.5 % ones from other places.

 

[dun]

It will possibly cut down some on the places available, but try to find someone that is willing to carry the paper themselves. Sometimes you can find people retiring from the business that are happy to help out younger folks that way.

 

[Sir Loin]

Texasgal,
Re:

So, will they not ask where the property is located and things about it(acerage ect.).

No, as you haven't started looking for it yet because you don't know how big a mortgage you qualify for.
They should only ask for your personal financial information and work history.
They have rule of thumb figures and should be able to do it off the top of their head.
Most realtors should be able to do it also, but a bank would be best.
Remember, you only want to be pre-qualified for a mortgage to find out what you will qualify for to determine what you can afford to buy so you can start looking for the property. You are not applying for a mortgage.

If you are new to all this, call 1-2 or 3 realtors and talk to them and see if they can pre-qualify you, just for practice, before you talk to a bank.
If you feel comfortable ask them if they can recommend a lender based on the information you have gaven them.
Of course they will want you to come into their office to do this, so ask them if they can just give you a BALL PARK figure over the phone, if not then go in and talk to them if you can.
It's best to do it in the area you intend to buy.
Any good realtor knows that the first step of a sale is pre-qualifying the buyer and they should be more then happy to talk to you.
Give it a try, it costs nothing!

Re:

The only reason I was looking into the FSA loan is because the interest rate is 4% versus the 6.5 % ones from other places.

Believe me, the strings attached to a loan like that will haunt you the rest of your life.
SL

 

[KenB]

Since you have a sizable down payment, you might find someone that would do owner financing.
Check into what is for sale in the area that you want to move to, and go from there.
There are alot of older people that are ready to retire, and the income from the load payment would help them as well.

Good luck
Ken

 

[texasgal0919]

Since you have a sizable down payment, you might find someone that would do owner financing.
Check into what is for sale in the area that you want to move to, and go from there.
There are alot of older people that are ready to retire, and the income from the load payment would help them as well.

Good luck
Ken

Thanks. I am actually currently looking for owner financing homes but the ones I have found are usually 20 acres with a old home and in my opinion, they are asking wayyyy to much for them. Wonder if they would dropthe price even though it is Owner financing situation

 

[Anonymous]

Texasgal-

I have found out the same thing about the FSA financing you are talking about. FSA wants three years of farm management before they will give you a loan- why?
I have worked on the commercial end of Agriculture for the last 5 years and have a BS in Business- but that does not count for much according to FSA.
Around here, they want to loan money to people who are currently farming- and pretty much do not need a beginning farmer's loan.

As far as mortgages go - on my income alone (my wife's not included) I applied for a home loan 1.5 years ago and the banker told me I was approved for at least $350,000. What?!?! There was no way I could make the note, property taxes, & PMI on that and have a worthwhile existence. Now- if I wanted to borrow money for a business(farm) that is a different story. I would first need to prove that I have enough net worth to basically not need the loan.

That is probably why Bear Sterns is in trouble and the Bakers are marching on Washington- we're focusing on the wrong things.

 

[EAT BEEF]

So, my husband and I are young and wanting to take out a loan for a ranch. We have the downpayment, we have the credit scores of 700 or over but we cannot seem to find anyone to loan us money for anything over 5 acres. We are wanting to take out a loan just for the land(and possibly home if there is one on it-if not we are paying cash for a cheap mobile home ot put on it).
Anyway so we go talk to FSA in west Texas and they will note even give us the time of day. These are the people who are supposed to help the young & beginning farmers, correct? They asked us if we had 3 years of managment of a farm or ranch and we said no. I was raised by a farmer and he was raised in Ranching business but we do not have any management as our dads were the managers and we both helped out when we could. We do not want to get our dads to lie about this or anything like that just so we can get the loan.
We just want a little help from someone...someone willing to give us the money to get started out...It is so difficult..we have been to first ag credit, FSA, and our local bank. Our bank said anything over 5 acres cannot be financed through them...ughh

We are moving to SW oklahoma and this is where we are buying the land. We are still in West Texas as we cannot move until we get a loan!
thanks

Edited to add: And another thing, what about working outside of the home while just getting startedi n Ranching. This is a must, right? Well the Ag places said that "Ag loans" are so you do not have to work outside of the home--you can put your time into ranching and you just pay a certain amount every year.

Your cost per cow might be cheaper in se oklahoma.

Imo stay away from FSA USDA and NRCS the less they know about what you do the better they will do little for you and enjoy owning your a$$.

I would think you could find to do a land contract with w/50% down but alot of them want it paid back in ten years.

I have always delt with farm credit and got along good,but I was buying equipment thru them when I was in the 9 th grade (my grandparents co-signed for me back then).I have never used them but a few people have told me that a bank in Altus Ok is very aggesive on farm loans, I can't remember their name but can't be that many banks in Altus.Aslo look in the High plains journal alway ads for people wanting to loan money in there(might be high intrest I don't know)

 

[larryshoat]

your problem isnt new.alot of banks now days wont make loans for land at all.no matter what its use.the best thing todo is talk to the banks where your planning on buying the land.talk to the farm credit banks.they make loans to people wanting to buy land.

Thank You. I am going to call them Monday. If we have a 50% downpayment it just blows my mind how they can turn us down.

Texasgal, first we must learn to think like the banker .Trying to convince them to make a loan based on the idea that they are only going to lose half their money is a hard sell, in other words they are worried about the other 50% . They have all kinds of ratios that they look at like debt to asset, needs to be 2 parts asset to 1 part debt after the loan is made .They want you to have enough income to service and retire debt plus enough to live on without counting on any income from what you are going to buy .As sugarman mentions they would rather loan money to someone that is established and proven than to take a risk on someone young and starting out .The bank will always do what is best for the bank, if that coincides with what is best for you then your in luck .National banks are tougher because they are federally regulated, a state abnk or an S&L may not be so regulated, therefore be easier to deal with . Don't get discouraged many of us have been exactly where you are . My prayers are with you for your success in this .

Larry

 

[TheBullLady]

I've been selling farm and ranch property in Texas for 12 years, and this situation seems rather odd to me. With a 50% down payment (based on what total amount?) the only reason a standard lender wouldn't want to loan the money is because you don't show a viable way to repay the loan. If you're starting out in ranching, something you've never done before, it's going to be considered a high risk.. no matter how hard you're willing to work at it. Have you looked into getting a business loan?

 

[FarmGirl10]

Get a loan from Farm Credit Service, or whatever the equivilent in your area is. Also, write up a business plan, that always helps, it lets them know that you put thought into it.

 

[texasgal0919]

So, my husband and I are young and wanting to take out a loan for a ranch. We have the downpayment, we have the credit scores of 700 or over but we cannot seem to find anyone to loan us money for anything over 5 acres. We are wanting to take out a loan just for the land(and possibly home if there is one on it-if not we are paying cash for a cheap mobile home ot put on it).
Anyway so we go talk to FSA in west Texas and they will note even give us the time of day. These are the people who are supposed to help the young & beginning farmers, correct? They asked us if we had 3 years of managment of a farm or ranch and we said no. I was raised by a farmer and he was raised in Ranching business but we do not have any management as our dads were the managers and we both helped out when we could. We do not want to get our dads to lie about this or anything like that just so we can get the loan.
We just want a little help from someone...someone willing to give us the money to get started out...It is so difficult..we have been to first ag credit, FSA, and our local bank. Our bank said anything over 5 acres cannot be financed through them...ughh

We are moving to SW oklahoma and this is where we are buying the land. We are still in West Texas as we cannot move until we get a loan!
thanks

Edited to add: And another thing, what about working outside of the home while just getting startedi n Ranching. This is a must, right? Well the Ag places said that "Ag loans" are so you do not have to work outside of the home--you can put your time into ranching and you just pay a certain amount every year.

Your cost per cow might be cheaper in se oklahoma.

Imo stay away from FSA USDA and NRCS the less they know about what you do the better they will do little for you and enjoy owning your a$$.

I would think you could find to do a land contract with w/50% down but alot of them want it paid back in ten years.

I have always delt with farm credit and got along good,but I was buying equipment thru them when I was in the 9 th grade (my grandparents co-signed for me back then).I have never used them but a few people have told me that a bank in Altus Ok is very aggesive on farm loans, I can't remember their name but can't be that many banks in Altus.Aslo look in the High plains journal alway ads for people wanting to loan money in there(might be high intrest I don't know)

We looked into SE Ok land around Antlers and Hugo but it seems to rocky for cows or it is timberland. It is decently priced but it is just land-no electricity-no well(sp?) or anything like that. I acutally like the area better than SW Oklahoma as it has some hills and water. Thanks

 

[texasgal0919]

I've been selling farm and ranch property in Texas for 12 years, and this situation seems rather odd to me. With a 50% down payment (based on what total amount?) the only reason a standard lender wouldn't want to loan the money is because you don't show a viable way to repay the loan. If you're starting out in ranching, something you've never done before, it's going to be considered a high risk.. no matter how hard you're willing to work at it. Have you looked into getting a business loan?

No I have not looked into getting a business loan. What is the difference in that vs just a regular mortgage? The problem we keep running into is they see our downpayment, our credit scores and all but then they ask "Where are you going to work?" Well of course we do not know that yet since we cannot apply for jobs in OK till our home in TX sells. Even if we only had a 20% downpayment, that seems like more than most people have. We are just scared that we are going to sell our house and the only loan we will qualify for is living in town in a small home which is completely opposite of what we want.Yea, I am sure we are considered high risk since we are young and not really experienced but their has to be a way other than inheritance

 

[texasgal0919]

your problem isnt new.alot of banks now days wont make loans for land at all.no matter what its use.the best thing todo is talk to the banks where your planning on buying the land.talk to the farm credit banks.they make loans to people wanting to buy land.

Thank You. I am going to call them Monday. If we have a 50% downpayment it just blows my mind how they can turn us down.

Texasgal, first we must learn to think like the banker .Trying to convince them to make a loan based on the idea that they are only going to lose half their money is a hard sell, in other words they are worried about the other 50% . They have all kinds of ratios that they look at like debt to asset, needs to be 2 parts asset to 1 part debt after the loan is made .They want you to have enough income to service and retire debt plus enough to live on without counting on any income from what you are going to buy .As sugarman mentions they would rather loan money to someone that is established and proven than to take a risk on someone young and starting out .The bank will always do what is best for the bank, if that coincides with what is best for you then your in luck .National banks are tougher because they are federally regulated, a state abnk or an S&L may not be so regulated, therefore be easier to deal with . Don't get discouraged many of us have been exactly where you are . My prayers are with you for your success in this .Larry

Wow, thank you for the kind words. It is good to know there are some people on here who do not think a young person has no chance at fulfillng their dreams. Yea, I understand about the beginners being high risk but it is really almost impossible to get anyone to even give you a chance. I have talked with FirstAg credit and they say we have everything we need except experience and employment in a new city. We are taking a big pay cut by moving BUT we want to live in a rural place.

 

[texasgal0919]

Let me ask everyone this...Do you have another job outside of your ranch...or did you when you started out? We are definetly going to but probably won't be bringing in more than 4k a month. That isn't much once you figure in bills and all.

 

[somn]

As a recipient of several FO loans thru The FSA 2 things about you throw a red flag up. The first being your need for FSA money. With such high downpayment money and also considering your credit score. You are not exactly the canidate they are looking for. Ontop of that you are without the three years farm management. However your need for government help thru a FO loan is more the reason they turned you down than anything. Despite what some have said about a FSA FO loan I believe it to be a very good program for those with the need. Without both of my FO loans I would never have been as successful as I am today. Very good program I would reccomend it to any young farmer who has the need and the ability to repay. As far as some who have said the strings attached will haunt you for the rest of your life I never had that problem. By the way that 4% money for 40 years only last as long as you need it. When your net value to debt ratio gets to a certain point you will be instructed to find a commercial lender to take over the loan. You will get a FSA gauruntee however from FSA for the note.

 

[texasgal0919]

As a recipient of several FO loans thru The FSA 2 things about you throw a red flag up. The first being your need for FSA money. With such high downpayment money and also considering your credit score. You are not exactly the canidate they are looking for. Ontop of that you are without the three years farm management. However your need for government help thru a FO loan is more the reason they turned you down than anything. Despite what some have said about a FSA FO loan I believe it to be a very good program for those with the need. Without both of my FO loans I would never have been as successful as I am today. Very good program I would reccomend it to any young farmer who has the need and the ability to repay. As far as some who have said the strings attached will haunt you for the rest of your life I never had that problem. By the way that 4% money for 40 years only last as long as you need it. When your net value to debt ratio gets to a certain point you will be instructed to find a commercial lender to take over the loan. You will get a FSA gauruntee however from FSA for the note.

That is what it seems like..we are overqualified for the FSA loan but underqualified for anything else. So frustrating! I have heard FSA is a good program from many. We may end up just buying 5 acres with cash and putting a mobile home on it. Not enough to have cattle but I feel like giving up at this point. My husband and I have been working for 3 years to get our credit above 700 and get money for a downpayment and pay off all our credit cards and now that we have accomplished all these goals it seems like we still are not candidates for any type of ranch program. We are young to have gone through all we have and we jsut wish someone would give us a freakin break