Lending question

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Re: Lending question

Postby TexasBred » Sun Apr 30, 2017 7:13 pm

alisonb wrote:
TexasBred wrote: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 banker's point of view he will take everything he can get as collateral.

Good advice...were you a banker by any chance :P . TB, would the bank only grant a loan on a certain % of property value over there(USA) and not 100%?

Yeah for a bit over 18 years. Really don't know what bank underwriting guidelines are now. Use to try to get 20% down no a real estate loan. Would lend 90% but at a little higher interest rate.
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Re: Lending question

Postby Cross-7 » Sun Apr 30, 2017 9:36 pm

Thanks for all the advice
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Re: Lending question

Postby ddd75 » Mon May 01, 2017 7:33 am

TexasBred wrote:
Cross-7 wrote:I've been kicking the idea around of expanding, but nothing has come up that I really like.

So while I wait I've wondered whether I should pay off my current place and use it as collateral when I find another place
Or keep cash on hand although I'd still need to borrow 25-50% to make the purchase.

From a bankers standpoint which looks more appealing ?
Paid for land as collateral or 50% vested
Say cash and paid for land being equal value

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.
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Re: Lending question

Postby ddd75 » Mon May 01, 2017 7:36 am

DLD wrote: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.
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Re: Lending question

Postby TexasBred » Mon May 01, 2017 8:51 am

ddd75 wrote:
TexasBred wrote:
Cross-7 wrote:I've been kicking the idea around of expanding, but nothing has come up that I really like.

So while I wait I've wondered whether I should pay off my current place and use it as collateral when I find another place
Or keep cash on hand although I'd still need to borrow 25-50% to make the purchase.

From a bankers standpoint which looks more appealing ?
Paid for land as collateral or 50% vested
Say cash and paid for land being equal value

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.
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Re: Lending question

Postby ddd75 » Mon May 01, 2017 11:39 am

TexasBred wrote:
ddd75 wrote:
TexasBred wrote: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.
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Re: Lending question

Postby TexasBred » Mon May 01, 2017 12:31 pm

ddd75 wrote:
TexasBred wrote:
ddd75 wrote:

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.
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Re: Lending question

Postby Jogeephus » Mon May 01, 2017 12:33 pm

double
Last edited by Jogeephus on Mon May 01, 2017 12:50 pm, edited 1 time in total.
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Re: Lending question

Postby Jogeephus » Mon May 01, 2017 12:34 pm

Jogeephus wrote:
TexasBred wrote: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.
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Re: Lending question

Postby TexasBred » Mon May 01, 2017 12:41 pm

Jogeephus wrote:
Jogeephus wrote:
TexasBred wrote: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.
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Re: Lending question

Postby Jogeephus » Mon May 01, 2017 12:58 pm

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?
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Re: Lending question

Postby TexasBred » Mon May 01, 2017 1:36 pm

Jogeephus wrote: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.
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Re: Lending question

Postby Jogeephus » Mon May 01, 2017 4:19 pm

TexasBred wrote:
Jogeephus wrote: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.
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Re: Lending question

Postby TexasBred » Mon May 01, 2017 4:40 pm

Jogeephus wrote:
TexasBred wrote:
Jogeephus wrote: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:
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Re: Lending question

Postby DLD » Mon May 01, 2017 6:11 pm

ddd75 wrote:
DLD wrote: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.
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