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jusolson
Friend

New House Mortgage

Hello everybody, I've got a question about home mortgages in the country.  My wife and I are planning on building a new home this summer on our farm.  We've got the plan worked out, but now I have been talking with the bank about possible financing routes.  I've always heard in the media, "low low rates!, 30 yr fixed.. ect....."  So I ask about this with the banks premeire real estate lender.  Our area (ND) is mostly dominated by agriculture, so she has quite a bit of experience in this field.  She tells me that my chances of being accepted for such a loan ( 25-30 yr fixed mortage) is quite small.  Reasons are that houses outside of town don't qualify because they need to compare to neighboring houses for value, ect... I think she put it in better words than I can remember.  Anyway she has tried before with other people and was not successfull.  My question is, is this something that is universal?  Or can you really get a loan like this out on the farm?  My next best option will be an Ag loan, meaning I can deduct the interest payment for taxes.  But with this loan I can only fix the interest rate for 5 yrs at a time.  I'd rather have the peace of mind with a fixed interest loan.  So what do you guys think? Has anybody done anything like this? Are there other companies/ banks that I would have to go through, or would it even make a difference.  Thank you for your input.

 

Justin

4 Replies
kenj3063508
Frequent Contributor

Re: New House Mortgage

Have you tried Farm Credit?  Mine does housing loans.  KenJ

sw363535
Honored Advisor

Re: New House Mortgage

If you have farm land acres to provide colateral for the loan, then you may be at the wrong lender.  In our area Farm Credit does home mortgages if they are coupled with farm land.  They will fix interest for longer terms.  Our local traditional banks like the 5 year adjustable rates also.

 

There is reason behind the reluctance to loan on a farm home.  Unless it is located close to a city and on blacktop roads, the resale value is not as good.  This is something the lender has to consider and you should too.

I live rurally and enjoy it, but I know utilities, transportation, fire risk, medical services, and police protection are either more expensive or less accessable.  All those items limit the value of a rural home as a lender or appraiser view it.

KNAPPer
Senior Contributor

Re: New House Mortgage

Search until you find a 30 year fixed rate with no penality for early pay off. Do not accept less. The lender decides and where you live is really not a concern for most lenders. Do not enter into something else. Check with other banks and lenders. You'll find one agreeable.

kraft-t
Senior Advisor

Re: New House Mortgage

Many rural banks aren't prepared for long term mortgage rates. Check in with the bigs as they are doing this all the time. Plus you wll probably get a more favorable rate. You may find that lending requirements may have tightened a bit for previous years.

 

I would lock in a long term rate if you can, We are at historically low rates for home buyers and rates will probably get much higher before your home mortgage matures.

 

I don't know what Farm credit offers for rural housing loans and what their rates might be. I would check them out as they are fine folks to deal with.