Borrowing money for a farm is a lot different than borrowing money for a home to live in. While you still take out a \u2018mortgage\u2019 to buy a farm, it\u2019s not your traditional mortgage that you\u2019d get for your home. This is agricultural lending and it looks a lot different than traditional mortgage lending.<\/p>\n
\nClick Here to Get Matched With a Lender.<\/span><\/a><\/p>\n Agricultural lenders are at a distinct disadvantage simply because of the riskiness that farming poses. There are numerous factors that could affect a farm\u2019s profits including:<\/p>\n A farmer\u2019s experience determines how well he or she handles the situations thrown at them. An inexperienced farmer could lose everything as a result of any of these factors whereas an experienced farmer may have a fighting chance at keeping the farm alive and productive. While there are farm loans for beginning farmers, it\u2019s much easier for lenders to give loans to those that have the ability to weather the storm, so to speak.<\/p>\n \nClick to See the Latest Mortgage Rates.<\/a><\/p>\n Just like with residential mortgage lending, agricultural lenders need to look at the following factors:<\/p>\n Agricultural lending is more than about whether a borrower qualifies for the loan. The lender must look at the future and determine how the borrower (farmer) is likely to do. While the lender cannot predict the weather, presence of disease, or market prices, they can see how a farmer will react to each of these conditions in order to determine how likely a borrower is to default.<\/p>\n Agricultural lending is a combination of all of these factors. No lender should put emphasis on any of the conditions, but rather look at the picture as a whole. If a lender focuses solely on the collateral, for example, they expect you to fail. But most lenders will require you to have some type of capital, so you can expect that across the board – it\u2019s like having a vested interest or a reason to make your payments.<\/p>\nFarming is Risky Business<\/h2>\n
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What Lenders Look At<\/h2>\n
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