Real Estate
Sponsored by

Advice on refinancing home with land

1,715 Views | 7 Replies | Last: 7 yr ago by SteveBott
tmtxco
How long do you want to ignore this user?
AG

Our home near BCS is situated on 100+ acres. Between land appreciation and paying down the note, we are down to a loan-to-value ratio of around 30%. The house and several acres are equal to or greater than the balance on the loan. We have excellent credit, and the loan is mid 6-figures.

Currently, we are at a ~5.5% interest with an ag lender. Though they pay out a dividend which makes the rate effectively lower, I can't help but wonder if we could be doing better given our current situation with the loan-to-value. As I see interest rates in the low to mid 3's, I am trying to figure out how we can refinance under these lower rates. We are open to putting more down, replatting the land to remove a large portion of the acreage or other things that would be required to make our property fit a typical mortgage.

Does anyone have recommendations for a mortgage company or broker who can help with this type of situation?
Bitter Old Man
How long do you want to ignore this user?
AG
Homes with that much acreage don't qualify for the mortgage market, that's why you are with an Ag Lender in the first place. Your effective rate after that dividend is probably close to 4%, which isn't that bad.

Your one option could be to survey out the house and a few acres and then you might be able to refinance that into a conventional mortgage, however if you are out in the country, they still might not be able to do it given the lack of comps. Also, the cost to survey out the house, along with closing/title costs would probably eat up most of your interest savings.

You would still be in the Jumbo Loan market so the rates would likely be higher than what you are seeing advertised.

If you are just trying to lower your payment, call your Ag Lender and talk to them about converting/amortizing the loan.

Ditto2016
How long do you want to ignore this user?
AG
I agree. Call Capital Farm Credit and see what they can do to sweeten your deal. They have options if they want to keep you.
CapitalFarmCredit
How long do you want to ignore this user?
Sponsor
What BOM and Ditto said. They are exactly right. The costs to survey, originate the loan, and availability of rural home properties can make it difficult to fit into the conventional mortgage market.
Please, give us a call and we can see how we may help you.
Sponsor Message:Whether looking to become a rural land owner, buy that ideal hunting property or finance your farm or ranching operation- with Capital Farm Credit, you're covered.
And our patronage dividend program means we share our profits and put money back in your pocket.

Together we’re better. Call 877-944-5500 or visit https://www.capitalfarmcredit.com/ to find out how.


SteveBott
How long do you want to ignore this user?
AG
Converting to residential mortgage is doable but calling AG lenders would be my first choice. I am in mortgage and you would need to:

1. survey out your homestead. If you have a fence already around the home you could use that for an outline. Figure 4-500 dollars for an acre or so.

2. more important I would contact local title companies and realtors to see if like properties have been sold recently. As pointed out you need these comps for appraisal. Appraisals in rural areas have a much more latitude for how far away they reach out, figure 25 miles from your home.

3.I can run some numbers upfront to see if would even pencil but need much more info. my contact info is in my profile
tmtxco
How long do you want to ignore this user?
AG
I've been meaning to post a follow-up to my original post seeking refinancing advice.

We were able to get our property refinanced at a fixed rate and lower interest rate, saving us hundreds a month. The key was surveying out the home and a few acres that was refinanced through the conventional markets from the bulk of the land, which we now own outright.

It turned out to be a much bigger project than I thought due to all the complexities of rural land, oil & gas leases, self-employment, slow surveyors, and of course appraisers.

We couldn't have done this without the help of Steve Bott. His rates were competitive, and most importantly, he and his team were there every step of the way to help us through the process. Thanks again, Steve.
SteveBott
How long do you want to ignore this user?
AG
Thanks TM. Your place was a challenge. I said I will take this on condition we both know it was tough bet.

and I saved you a 1000 a month .

Done

I'm happy happy happy right now

Let's do CO!
JimDandy
How long do you want to ignore this user?
Bitter Old Man said:

Homes with that much acreage don't qualify for the mortgage market, that's why you are with an Ag Lender in the first place.

How much land requires an Ag lender versus the standard mortgage market? TIA.
SteveBott
How long do you want to ignore this user?
AG
Up to 25 acres but it gets really dicey with that much. Hard to find comps for the appraisal and you need at least three. Also need to limit the land to no more then 40% of total value and better at 30%. Bigger the house more land is available.

What I did was send a realtor friend out and do inspection and we paid her a small consulting fee at the door. She gave us a suggestion on per foot value on the home and per acre value per raw land.

Then we surveyed the amount of land needed to get our numbers we wanted. Then we appraised.

OP has roughly 12% land with a mortgage and saved 1.625% on rate over the farm financing.
Refresh
Page 1 of 1
 
×
subscribe Verify your student status
See Subscription Benefits
Trial only available to users who have never subscribed or participated in a previous trial.