Lending question

[ddd75]

Fees and closing cost will be higher on a loan with two separate properties as collateral. You'll have two appraisals, two survey, possibly two title policies, not to mention a larger loan balance and more interest paid each month. I'd keep one property free and clear just in case everything might go to he// unexpectedly . At least you'd have it left to start over with. From the bankers point of view he will take everything he can get as collateral.

i've used multiple properties as collateral for 5 loans so far and the only thing extra I have to pay is for 2 appraisals.

Sounds like you're dealing with a "borrower friendly" lender. Personally I'd never put up a separate property as additional collateral to obtain a loan. If the property won't stand on it's own to get the loan either I'm too weak financially or the property is not worth what the sale price. But any smart lender will take all the collateral you offer him IF you have considerable equity in it.

i gave collateral so i'd be able to do 0 down out of pocket. more money in my pocket = more money to make.

 

[TexasBred]

i've used multiple properties as collateral for 5 loans so far and the only thing extra I have to pay is for 2 appraisals.

Sounds like you're dealing with a "borrower friendly" lender. Personally I'd never put up a separate property as additional collateral to obtain a loan. If the property won't stand on it's own to get the loan either I'm too weak financially or the property is not worth what the sale price. But any smart lender will take all the collateral you offer him IF you have considerable equity in it.

i gave collateral so i'd be able to do 0 down out of pocket. more money in my pocket = more money to make.

I'm sure everyone has there own reasons for how they do things. Myself, I'd have kept my other property free and clear, paid a large down payment and financed only what was absolutely necessary and then set out to pay it off as quickly as possible to hold down total cost of the loan. But that's just me.

 

[Jogeephus]

double

 

[Jogeephus]

Sounds like you're dealing with a "borrower friendly" lender. Personally I'd never put up a separate property as additional collateral to obtain a loan. If the property won't stand on it's own to get the loan either I'm too weak financially or the property is not worth what the sale price. But any smart lender will take all the collateral you offer him IF you have considerable equity in it.

Ditto. Also by tying up another property you may have to get their permission to do certain things on your collateral property.

 

[TexasBred]

Sounds like you're dealing with a "borrower friendly" lender. Personally I'd never put up a separate property as additional collateral to obtain a loan. If the property won't stand on it's own to get the loan either I'm too weak financially or the property is not worth what the sale price. But any smart lender will take all the collateral you offer him IF you have considerable equity in it.

Ditto. Also by tying up another property you may have to get their permission to do certain things on your collateral property.

True Joe and if you sell either of the properties lender usually requires a large amount of the money (if not all) be applied to the loan to cover their loss of collateral.

 

[Jogeephus]

TB, just another thought. Lets say you shopped around for weeks trying to find the best interest rate and let's say you plopped down some extra to get some better points and managed to finance at say 5% and you put your other property up for collateral.

Let's say you did all this but in year four you decide to sell the property you had up as collateral because you a great deal and a buyer came along. Now let's say the bank wants all of the money to pay off your note since you have now removed their collateral. Did all your efforts to finance at the cheapest interest possible pan out or did you just increase the rate of return for the bank significantly?

 

[TexasBred]

TB, just another thought. Lets say you shopped around for weeks trying to find the best interest rate and let's say you plopped down some extra to get some better points and managed to finance at say 5% and you put your other property up for collateral.

Let's say you did all this but in year four you decide to sell the property you had up as collateral because you a great deal and a buyer came along. Now let's say the bank wants all of the money to pay off your note since you have now removed their collateral. Did all your efforts to finance at the cheapest interest possible pan out or did you just increase the rate of return for the bank significantly?

Well you're not out any more cash but you definitely just increased their APR as the amount you paid in "points" as well as any other prepaid fees now becomes a higher percentage than originally disclosed and they get to keep it.

 

[Jogeephus]

TB, just another thought. Lets say you shopped around for weeks trying to find the best interest rate and let's say you plopped down some extra to get some better points and managed to finance at say 5% and you put your other property up for collateral.

Let's say you did all this but in year four you decide to sell the property you had up as collateral because you a great deal and a buyer came along. Now let's say the bank wants all of the money to pay off your note since you have now removed their collateral. Did all your efforts to finance at the cheapest interest possible pan out or did you just increase the rate of return for the bank significantly?

Well you're not out any more cash but you definitely just increased their APR as the amount you paid in "points" as well as any other prepaid fees now becomes a higher percentage than originally disclosed and they get to keep it.

Lovely deal for the lender wouldn't you agree? I guess its how you look at it but I think the borrower is out more money. Sortof like pre-paying for fertilizer and never using it. Its money and opportunity gone.

 

[TexasBred]

TB, just another thought. Lets say you shopped around for weeks trying to find the best interest rate and let's say you plopped down some extra to get some better points and managed to finance at say 5% and you put your other property up for collateral.

Let's say you did all this but in year four you decide to sell the property you had up as collateral because you a great deal and a buyer came along. Now let's say the bank wants all of the money to pay off your note since you have now removed their collateral. Did all your efforts to finance at the cheapest interest possible pan out or did you just increase the rate of return for the bank significantly?

Well you're not out any more cash but you definitely just increased their APR as the amount you paid in "points" as well as any other prepaid fees now becomes a higher percentage than originally disclosed and they get to keep it.

Lovely deal for the lender wouldn't you agree? I guess its how you look at it but I think the borrower is out more money. Sortof like pre-paying for fertilizer and never using it. Its money and opportunity gone.

Technically he is out more cash but he definitely won't get a refund. :lol:

 

[DLD]

If you can go with a Farm Credit institution, I think you'd like it. They will probably require 30-35% down (FSA guarantees are an option if you're in a tighter financial situation), but you'll be dealing with a lender that is strictly agricultural - they understand what's going on, and want to help you be successful. Depending on which county you're in, there are 2-3 different associations serving sw OK. It's at least worth checking into.

i've had so many people try to buy my places with banks like 'farm credit' etc.. they are VERY difficult to get loans through.

A local bank is much easier to deal with. bar none


I've purchased 3 farms and I've gotten all 3 with 0 down just other property as collateral.

Every Farm Credit association will be different to deal with, just like every commercial bank. That's like saying never drive a Chevy because you don't like your local dealership. Yes, you're going to need pretty good financials to deal with a Farm Credit, but in return you're getting better rates and better terms than most commercial banks will offer, not to mention I know of no commercial banks that pay patronage, but most Farm Credits do.

Around here, most of the mid sized banks are being bought up by big banks who have little to no interest in ag lending. I agree that small local banks are usually the easiest to deal with, my local banker has never told me no, but he doesn't negotiate on interest or terms. You take it or leave it. I do all my short term stuff with him because it is easy, but Farm Credit has always been a far better deal for us for anything longer than a year or so.

There are some local and regional banks in some places that are competitive ag lenders, I'm certainly not saying not to give them a chance if you have one or more of those nearby, but I know something about the situation here in SW OK. I still stand by my statement that Farm Credit is worth looking into as well.

 

[ddd75]

If you can go with a Farm Credit institution, I think you'd like it. They will probably require 30-35% down (FSA guarantees are an option if you're in a tighter financial situation), but you'll be dealing with a lender that is strictly agricultural - they understand what's going on, and want to help you be successful. Depending on which county you're in, there are 2-3 different associations serving sw OK. It's at least worth checking into.

i've had so many people try to buy my places with banks like 'farm credit' etc.. they are VERY difficult to get loans through.

A local bank is much easier to deal with. bar none


I've purchased 3 farms and I've gotten all 3 with 0 down just other property as collateral.

Every Farm Credit association will be different to deal with, just like every commercial bank. That's like saying never drive a Chevy because you don't like your local dealership. Yes, you're going to need pretty good financials to deal with a Farm Credit, but in return you're getting better rates and better terms than most commercial banks will offer, not to mention I know of no commercial banks that pay patronage, but most Farm Credits do.

Around here, most of the mid sized banks are being bought up by big banks who have little to no interest in ag lending. I agree that small local banks are usually the easiest to deal with, my local banker has never told me no, but he doesn't negotiate on interest or terms. You take it or leave it. I do all my short term stuff with him because it is easy, but Farm Credit has always been a far better deal for us for anything longer than a year or so.

There are some local and regional banks in some places that are competitive ag lenders, I'm certainly not saying not to give them a chance if you have one or more of those nearby, but I know something about the situation here in SW OK. I still stand by my statement that Farm Credit is worth looking into as well.

I'm not saying not to look into them.. they might have the best deal .. *IF* you qualify for them. I've seen A LOT of people turned down by that agency that any other bank would give a loan too.

The big problem is they tell people.. "oh, we have this program that will fit you PERFECT!!"

Then they take 40-60 days+ to give you a decision.. the entire time saying "it looks good". The problem with that is then they come out and say.. well its not going to work.. your done. you lost the farm, another buyer has it, etc.

My 2nd farm I tried to use them as I was buying a place out of state and moving there. Oh yea.. no problem, we can do that.. 30 days into it they just point blank told my wife.. "we don't believe you own what you do, how did you get all this at such a young age, its impossible" She said.. we have all the proof, titles, etc.. we've worked really hard" FC: " so.... how did you do it though?" wife: "are you going to do the loan?" FC: "no"

not because I wasn't qualified.. not because I didn't have a down payment.. because they didn't want to believe what I owned.. WHAT?!??!!?!??!?!?!?!?! crazy.

That 1/2 interest point won't do you any good if you don't get what your trying to buy.

From what I've seen, only people with MORE then enough money have a chance at getting a loan through FC. OR.. I HAVE seen them get the loan but daddy has put his name on it as well, and has the money.

This isn't a 1 time thing, i've seen this with at least 2 dozen people in 3 states using different FC offices get turned down. It wasn't because they weren't qualified either. I even had my last realtor tell me he knows the lady who runs this FC office and she'll get the loan through.. NO PROBLEM! well.. I told him it wasn't going to work..etc.. He wouldn't budge and sure enough, she said her hands were tied.. couldn't do it.. just like I told him from day 1.

IF you're going to use them I HIGHLY suggest you also go with a local bank at the same time... so you don't lose your chances at what your trying to buy..


You might think FC will give you the best rates.. but i've done better everytime with a local bank. My most recent farm loan was at 4.5% @ 30 year loan with 0 down out of pocket. You'll never see that deal with FC.

also on this same farm I bought, the guy had a loan with FC that needed paid for title could transfer. They would NOT take the money. We were on hold for over 2 weeks and the bank had to use their attorney to get them to take the money!

I know a lot of people on here have used them and it worked out great, but what I'm saying is don't put all your marbles in one basket.. always.. always have a backup IF you really want what your trying to buy.

just my experiences

 

[True Grit Farms]

I had the same problems with Farm Credit myself. I'm a "creative financier" in their eyes.

 

[Cross-7]

I've used farm credit several times in Texas and Oklahoma over the years and never had a problem, except one time their appraisal was 50.00 an acre less that the price I was buying it for.
I still think they were wrong.
I may not be good at many things but I've been pretty good at buying under valued property and this one was at least a 100 an acre under.
There hasn't been anything in the area that has sold for what they appraised it for.
Even one place that wasn't as good and sold at auction brought more than the appraisal.

They are my first choice when financing

 

[TexasBred]

I'm not saying not to look into them.. they might have the best deal .. *IF* you qualify for them. I've seen A LOT of people turned down by that agency that any other bank would give a loan too.

The big problem is they tell people.. "oh, we have this program that will fit you PERFECT!!"

Then they take 40-60 days+ to give you a decision.. the entire time saying "it looks good". The problem with that is then they come out and say.. well its not going to work.. your done. you lost the farm, another buyer has it, etc.

My 2nd farm I tried to use them as I was buying a place out of state and moving there. Oh yea.. no problem, we can do that.. 30 days into it they just point blank told my wife.. "we don't believe you own what you do, how did you get all this at such a young age, its impossible" She said.. we have all the proof, titles, etc.. we've worked really hard" FC: " so.... how did you do it though?" wife: "are you going to do the loan?" FC: "no"

not because I wasn't qualified.. not because I didn't have a down payment.. because they didn't want to believe what I owned.. WHAT?!??!!?!??!?!?!?!?! crazy.

That 1/2 interest point won't do you any good if you don't get what your trying to buy.

From what I've seen, only people with MORE then enough money have a chance at getting a loan through FC. OR.. I HAVE seen them get the loan but daddy has put his name on it as well, and has the money.

This isn't a 1 time thing, i've seen this with at least 2 dozen people in 3 states using different FC offices get turned down. It wasn't because they weren't qualified either. I even had my last realtor tell me he knows the lady who runs this FC office and she'll get the loan through.. NO PROBLEM! well.. I told him it wasn't going to work..etc.. He wouldn't budge and sure enough, she said her hands were tied.. couldn't do it.. just like I told him from day 1.

IF you're going to use them I HIGHLY suggest you also go with a local bank at the same time... so you don't lose your chances at what your trying to buy..


You might think FC will give you the best rates.. but i've done better everytime with a local bank. My most recent farm loan was at 4.5% @ 30 year loan with 0 down out of pocket. You'll never see that deal with FC.

also on this same farm I bought, the guy had a loan with FC that needed paid for title could transfer. They would NOT take the money. We were on hold for over 2 weeks and the bank had to use their attorney to get them to take the money!

I know a lot of people on here have used them and it worked out great, but what I'm saying is don't put all your marbles in one basket.. always.. always have a backup IF you really want what your trying to buy.

just my experiences

DDD lenders can't turn down potential borrowers "just for the he// of it". They have to have a verifiable reason and state that reason in the letter of denial. (That's a federal regulation). I don't know any that will make a 100% loan either. Now you may get a loan for "nothing out of your pocket" but I believe you said you put up another property as additional collateral so you did in fact pledge something of considerable value as collateral. I've never known a bank to turn down money except in the case where a loan was in foreclosure, the final demand letter had been sent and the property was posted for sale, after which they will refuse to take anything short of the total delinquency at best or total payoff of the debt at the worst.
The best backup plan to approach any lender with a situation that is workable for everyone involved as far as down payments, verifiable income and debts, ability to repay and a credit score well above average and nobody has to make any exceptions to their general policies. The deal will sail through as smooth as silk every time.

 

[Cross-7]

Just to add one more thing about farm credit.
Everyone I've ever dealt with there has been top notch and super to deal with.
There is another called Ag (state I'm from)
That was pure misery.
To make a long story short they said we can't give you a loan because of your cc debt.
I responded I don't have any cc debt.
They said your wife does.
I jumped her a$$
Wrong thing to do !!!! ( FYI check facts 1st)
It was like 2500
I called and explained that was month to month expenses raising a family and we try to get as many points as we can so we use it for everything and was paid off every month
End result no loan.
Farm credit came through and matched the internet rate the other was offering

 

[ddd75]

I'm not saying not to look into them.. they might have the best deal .. *IF* you qualify for them. I've seen A LOT of people turned down by that agency that any other bank would give a loan too.

The big problem is they tell people.. "oh, we have this program that will fit you PERFECT!!"

Then they take 40-60 days+ to give you a decision.. the entire time saying "it looks good". The problem with that is then they come out and say.. well its not going to work.. your done. you lost the farm, another buyer has it, etc.

My 2nd farm I tried to use them as I was buying a place out of state and moving there. Oh yea.. no problem, we can do that.. 30 days into it they just point blank told my wife.. "we don't believe you own what you do, how did you get all this at such a young age, its impossible" She said.. we have all the proof, titles, etc.. we've worked really hard" FC: " so.... how did you do it though?" wife: "are you going to do the loan?" FC: "no"

not because I wasn't qualified.. not because I didn't have a down payment.. because they didn't want to believe what I owned.. WHAT?!??!!?!??!?!?!?!?! crazy.

That 1/2 interest point won't do you any good if you don't get what your trying to buy.

From what I've seen, only people with MORE then enough money have a chance at getting a loan through FC. OR.. I HAVE seen them get the loan but daddy has put his name on it as well, and has the money.

This isn't a 1 time thing, i've seen this with at least 2 dozen people in 3 states using different FC offices get turned down. It wasn't because they weren't qualified either. I even had my last realtor tell me he knows the lady who runs this FC office and she'll get the loan through.. NO PROBLEM! well.. I told him it wasn't going to work..etc.. He wouldn't budge and sure enough, she said her hands were tied.. couldn't do it.. just like I told him from day 1.

IF you're going to use them I HIGHLY suggest you also go with a local bank at the same time... so you don't lose your chances at what your trying to buy..


You might think FC will give you the best rates.. but i've done better everytime with a local bank. My most recent farm loan was at 4.5% @ 30 year loan with 0 down out of pocket. You'll never see that deal with FC.

also on this same farm I bought, the guy had a loan with FC that needed paid for title could transfer. They would NOT take the money. We were on hold for over 2 weeks and the bank had to use their attorney to get them to take the money!

I know a lot of people on here have used them and it worked out great, but what I'm saying is don't put all your marbles in one basket.. always.. always have a backup IF you really want what your trying to buy.

just my experiences

DDD lenders can't turn down potential borrowers "just for the he// of it". They have to have a verifiable reason and state that reason in the letter of denial. (That's a federal regulation). I don't know any that will make a 100% loan either. Now you may get a loan for "nothing out of your pocket" but I believe you said you put up another property as additional collateral so you did in fact pledge something of considerable value as collateral. I've never known a bank to turn down money except in the case where a loan was in foreclosure, the final demand letter had been sent and the property was posted for sale, after which they will refuse to take anything short of the total delinquency at best or total payoff of the debt at the worst.
The best backup plan to approach any lender with a situation that is workable for everyone involved as far as down payments, verifiable income and debts, ability to repay and a credit score well above average and nobody has to make any exceptions to their general policies. The deal will sail through as smooth as silk every time.

looks like i'll be goign with farm credit next time!

 

[hurleyjd]

You are also a owner with the Farm Credit banks. I have a 4.5 loan. After profit sharing the rate was 3.25. We closed within two weeks holdup was the independent appraiser. I have a friend that manages a Credit Union. he states if you can pay it back he will loan it if you cannot then go somewhere else. He also said that he has to have 20% tied up in a real estate loan. Vehicles is another story with him. Also I had to come up with $40000 plus to make the Farm Credit deal work.

 

[TexasBred]

You are also a owner with the Farm Credit banks. I have a 4.5 loan. After profit sharing the rate was 3.25. We closed within two weeks holdup was the independent appraiser. I have a friend that manages a Credit Union. he states if you can pay it back he will loan it if you cannot then go somewhere else. He also said that he has to have 20% tied up in a real estate loan. Vehicles is another story with him. Also I had to come up with $40000 plus to make the Farm Credit deal work.

Real estate lenders are just like all others. They want you to have an investment in the property (down payment) giving you something to lose. Makes you a bit more unlikely to bail on them. With all the current regulations I'm really surprised they can get a loan closed in 2 weeks. That's hardly any time at all.

 

[Brute 23]

It is beyond me why you would want a zero down loan if you have cash in your hand.

 

[ddd75]

It is beyond me why you would want a zero down loan if you have cash in your hand.

no shame in admitting it.