Too much land?

Ridgefarmer63 · 02-02-2012, 01:42 PM

Get a load of this....We have always thought it would be nice to own Winni front. Or perhaps even just rent for a period of time so we are trying to free up funds. We have a mortgage rate in the mid 5's on our farm, so I thought it would be a good idea to re-fi. NOT SO FAST. Since we have too much excess land, we do not fit into the mortgage lenders "box". Our ratios are great, plenty of equity left, beautiful home on a professionally managed forest (Forest Management Plan done). I have tried two or three lenders and when they hear 115 plus acres they so no. We have to pay a rate that's 2-3 % higher.

A lot of smart people on this forum, any constructive suggestions would be appreciated.

Help, before my %$#@in' head explodes.

crowsnest · 02-02-2012, 03:14 PM

Quote:

Originally Posted by Ridgefarmer63

Get a load of this....We have always thought it would be nice to own Winni front. Or perhaps even just rent for a period of time so we are trying to free up funds. We have a mortgage rate in the mid 5's on our farm, so I thought it would be a good idea to re-fi. NOT SO FAST. Since we have too much excess land, we do not fit into the mortgage lenders "box". Our ratios are great, plenty of equity left, beautiful home on a professionally managed forest (Forest Management Plan done). I have tried two or three lenders and when they hear 115 plus acres they so no. We have to pay a rate that's 2-3 % higher.

A lot of smart people on this forum, any constructive suggestions would be appreciated.

Help, before my %$#@in' head explodes.

Dont pay your mortgage for 6 months and then you will qualify for a mortgage modifacation If you pay on time and have great credit you are sh%# out of luck I had the same problem (with out the farm)took me over a year and I am @ 4 % now

MAXUM · 02-02-2012, 04:15 PM

Quote:

Originally Posted by Ridgefarmer63

Get a load of this....We have always thought it would be nice to own Winni front. Or perhaps even just rent for a period of time so we are trying to free up funds. We have a mortgage rate in the mid 5's on our farm, so I thought it would be a good idea to re-fi. NOT SO FAST. Since we have too much excess land, we do not fit into the mortgage lenders "box". Our ratios are great, plenty of equity left, beautiful home on a professionally managed forest (Forest Management Plan done). I have tried two or three lenders and when they hear 115 plus acres they so no. We have to pay a rate that's 2-3 % higher.

A lot of smart people on this forum, any constructive suggestions would be appreciated.

Help, before my %$#@in' head explodes.

My guess, they see more value in the land vs the house. Based on my looking around, banks don't like lending on land... if they do the rate is higher as is the down payment so even if you did get somebody to underwrite a loan they probably will not come close to the full value of the property. Also, one other thing that comes to mind, if that property is in current use, IE tax deferred status they may not like that either. I'm no expert here just my thoughts. I will however disagree with NOT paying your mortgage.

gf2020 · 02-02-2012, 04:37 PM

Subdivide the property into multiple lots, with your house on just one of the lots, say 2-5 acres. Refinance the mortgage with just your house and the new lot as collateral. It will probably cost you at least $10K in legal and surveying fees but it will be worth it in the long run.

BroadHopper · 02-02-2012, 04:48 PM

I don't have the problem as my land was zoned rural/agricultural. It is a working farm as it only produced hay for other farmers. I have over 350 acres.

Better check that out.

But for tax purpose, my property tax is sky high only because I have a fantastic view of the lake and mountains. No wonder farms are given up the ghost!

Belmont Resident · 02-03-2012, 08:03 AM

Quote:

Originally Posted by BroadHopper

I don't have the problem as my land was zoned rural/agricultural. It is a working farm as it only produced hay for other farmers. I have over 350 acres.

Better check that out.

But for tax purpose, my property tax is sky high only because I have a fantastic view of the lake and mountains. No wonder farms are given up the ghost!

Glad to see there are some that value their land instead of greed. Sad that at almost amy place on the lake all you see is houses. And more and more of the hills are being dotted with them as well.

TomC · 02-03-2012, 08:36 AM

Quote:

Originally Posted by gf2020

Subdivide the property into multiple lots, with your house on just one of the lots, say 2-5 acres. Refinance the mortgage with just your house and the new lot as collateral. It will probably cost you at least $10K in legal and surveying fees but it will be worth it in the long run.

the current leinholder probably isn't going to let the parcel be carved up.

Steve H · 02-03-2012, 08:57 AM

I am just finishing up refinancing our home on 143 acres in Deerfield with a standard 30 year mortgage and 4% rate. I did try a few banks first and they tried to put us in their portfolio program with a 20 year term and 5% plus rate. I ended up going through Brian Springmann at Mortgage Financial Services out of Bedford 321-0108 who understood problem of refinancing land heavy properties and figured out how to get it done. The biggest problem we had during the process was finding comps with a lot of acreage, but once the apprasial was done everything else has been smooth.

lakershaker · 02-03-2012, 10:19 AM

The problem you have is that your property doesn't qualify as a "conforming" mortgage. There are a lot of things that need to be right to conform - your ratios and credit score are one, but the property can't have more than 5 acres. If a mortgage is conforming, the bank can sell it to Fannie Mae or Freddie Mac (securitize it), and then more easily sell the mortgage to the market. Basically, Fannie and Freddie guarantee to the end buyer that there won't be any credit loss, but when you are dealing with large acreage, it is harder for them to have comfort with the appraisal.

As SteveH said, your best bet may be to find a smaller local bank who understands the area and is willing and able to keep the mortgage as a loan on their books. But most banks don't want to hold 30 year mortgages, so that is why you are looking at a higher rate - that is the rate they need to make money in their mind. You would have a better shot at a good rate if you looked at a 15 year or 20 year mortgage (there is less interest rate risk for the bank), but then you would be paying more in your payment as it amortizes faster.

If your Forest Plan qualifies as a Tree Farm, you could also look at Farmer Mac (Federal Agricultural Mortgage Corporation), the agriculture equivilant of Fannie and Freddie, or the Farm Credit Administration. Their websites would have some good info.

02-02-2012, 01:42 PM	#1
Ridgefarmer63 Member Join Date: Feb 2011 Location: New Durham, NH Posts: 39 Thanks: 23 Thanked 3 Times in 3 Posts	Too much land? Get a load of this....We have always thought it would be nice to own Winni front. Or perhaps even just rent for a period of time so we are trying to free up funds. We have a mortgage rate in the mid 5's on our farm, so I thought it would be a good idea to re-fi. NOT SO FAST. Since we have too much excess land, we do not fit into the mortgage lenders "box". Our ratios are great, plenty of equity left, beautiful home on a professionally managed forest (Forest Management Plan done). I have tried two or three lenders and when they hear 115 plus acres they so no. We have to pay a rate that's 2-3 % higher. A lot of smart people on this forum, any constructive suggestions would be appreciated. Help, before my %$#@in' head explodes.

02-02-2012, 04:48 PM	#5
BroadHopper Senior Member Join Date: Oct 2004 Location: Laconia NH Posts: 5,571 Thanks: 3,209 Thanked 1,101 Times in 793 Posts	Interesting I don't have the problem as my land was zoned rural/agricultural. It is a working farm as it only produced hay for other farmers. I have over 350 acres. Better check that out. But for tax purpose, my property tax is sky high only because I have a fantastic view of the lake and mountains. No wonder farms are given up the ghost! __________________ Someday may never be an actual day.

02-03-2012, 08:57 AM	#8
Steve H Junior Member Join Date: Mar 2008 Posts: 9 Thanks: 1 Thanked 1 Time in 1 Post	Mortgage on a land heavy property I am just finishing up refinancing our home on 143 acres in Deerfield with a standard 30 year mortgage and 4% rate. I did try a few banks first and they tried to put us in their portfolio program with a 20 year term and 5% plus rate. I ended up going through Brian Springmann at Mortgage Financial Services out of Bedford 321-0108 who understood problem of refinancing land heavy properties and figured out how to get it done. The biggest problem we had during the process was finding comps with a lot of acreage, but once the apprasial was done everything else has been smooth.

02-03-2012, 10:19 AM	#9
lakershaker Senior Member Join Date: Jul 2004 Location: Rattlesnake Isl. - Simsbury, CT Posts: 274 Thanks: 91 Thanked 46 Times in 28 Posts	Not conforming The problem you have is that your property doesn't qualify as a "conforming" mortgage. There are a lot of things that need to be right to conform - your ratios and credit score are one, but the property can't have more than 5 acres. If a mortgage is conforming, the bank can sell it to Fannie Mae or Freddie Mac (securitize it), and then more easily sell the mortgage to the market. Basically, Fannie and Freddie guarantee to the end buyer that there won't be any credit loss, but when you are dealing with large acreage, it is harder for them to have comfort with the appraisal. As SteveH said, your best bet may be to find a smaller local bank who understands the area and is willing and able to keep the mortgage as a loan on their books. But most banks don't want to hold 30 year mortgages, so that is why you are looking at a higher rate - that is the rate they need to make money in their mind. You would have a better shot at a good rate if you looked at a 15 year or 20 year mortgage (there is less interest rate risk for the bank), but then you would be paying more in your payment as it amortizes faster. If your Forest Plan qualifies as a Tree Farm, you could also look at Farmer Mac (Federal Agricultural Mortgage Corporation), the agriculture equivilant of Fannie and Freddie, or the Farm Credit Administration. Their websites would have some good info.

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02-02-2012, 04:37 PM	#4
gf2020 Senior Member Join Date: Feb 2009 Location: North of Boston Posts: 203 Thanks: 11 Thanked 35 Times in 28 Posts	Subdivide the property into multiple lots, with your house on just one of the lots, say 2-5 acres. Refinance the mortgage with just your house and the new lot as collateral. It will probably cost you at least $10K in legal and surveying fees but it will be worth it in the long run.

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