How To Find and Finance a Farm
(Page 5 of 8)
The Farmers Home Administration also makes loans for the
purchase of small farms if the applicant is considered
eligible and has dependable off-farm income. The applicant
must plan to continue farming part-time. If rural housing
is desired, any individual who is unable to obtain
sufficient credit elsewhere may qualify for a mortgage
loan. For further specific information, contact the local
Farmers Home Administration office in your county seat town
or write to the Farmers Home Administration, Department
of Agriculture, Washington, D. C 20250.
RELATED CONTENT
FEDERAL LAND BANKS make long-term farm
mortgages through 700 local Federal Land Banks and their
associates (This is how the family farm back in Indiana was
financed—JS). The Land Banks and associations are
owned cooperatively by their member borrowers. Funds are
obtained from the investing public through the sale of
Federal farm loan bonds. First mortgage loans are arranged
for persons who are—or will be—engaged in
farming and who will derive a principal part of their
income from farming. For more details, contact the Farm
Credit Administration, Washington, D.C. 20578 or a
local Federal Land Bank or association.
INDIVIDUAL LENDERS who are willing to make greater risk
loans than a lending institution will handle are to be
found in almost any community. These individuals usually
prefer short term loans and charge a higher rate of
interest. They may be a last alternative for a
hard-to-finance deal.
PURCHASE MONEY MORTGAGES are another alternative to usual
financing sometimes used by real estate dealers during
periods of tight money. A seller to (1) get his price and
(2) save a considerable amount in taxes [as long as he
receives no more than 30% of the sale price during the year
of the sale] will sometimes "carry the paper" when
sufficient loan money is not otherwise available.
A SECOND MORTGAGE can often be arranged on the difference
between the loan value on a property and the actual asking
price. If the seller has sufficient credit to arrange a
ventional mortgage he can finance the balance through a
second mortgage on the same terms as the first mortgage
(and he may ask for a percentage from the buyer for
arranging the deal). The buyer may have the right to prepay
on the second mortgage and the seller can sell the second
mortgage to a third party at a discount. By "inflating" the
sale price, the seller can make up any loss he might
realize on a discount.
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