Basics of an Ag Real Estate Loan

The title of this article, while meant to convey a simple and easy to read piece, may belie the complexity and multitude of options available when purchasing and financing farm land. Financing options are plentiful: fixed vs variable rate, various mixes and matches of terms and amortizations, balloon payment or fully amortizing, open prepayment options or prepayment penalties, and so on. Once a loan product is chosen, it is typically difficult and costly to undue or change. Your choice is final until the loan runs its course or one chooses to refinance. While the availability of options is great from a borrowing standpoint and for the ability to customize the borrowing experience, it also requires a certain level of understanding to make an informed decision.

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