This week we have been discussing financing farmland and parts of that equation.
Today we will address the term of the loan. The term is the length of the loan. It is for a specific period of time. Many farmland loans are for 15-25 year periods. The term of the loan is usually negotiated between the lender and the borrower. The length of the term can also determine the interest rate. The longer the term the lower the annual payment. The interest rate on a 15-year loan typically will have lower rates than a 30-year loan so you will pay less interest from the beginning. A 15-year loan will likely have a higher annual payment than a 30- year loan. It is important to determine your cash flow from the land, less your costs such as property tax, loan payment, land management fees, and farm liability insurance to help determine what loan term works best.
Call or email me if you have questions on what term is best.
What’s more, I can put you in touch with some great lenders that can help you.