Had an amazingly informative conversation yesterday with Jeff Stine of Platinum Financial Funding regarding how current market changes are affecting ranch/hobby farm financing here in Tennessee. Here are some tips that might be helpful if you are considering financing a hobby farm or ranch:
- If you stay at 10 acres or less with a home, you have several financing options, including FHA. If you go over 10 acres, your options diminish quickly. Important note: FHA is not currently fond of modular homes or trailers on acreage and will not finance them. Your primary option for more than 10 acres with home, or modular homes or trailers, or land by itself is BANK financing.
- Community Banks are your best bet for financing most farm/ranch properties over 10 acres. The four Jeff recommended most highly are: American Security Bank and Trust, Sumner Bank and Trust (at Indian Lake), First State Bank, and Wilson Bank and Trust. Bank financing usually requires 20 to 25% down.
- If you find the ideal equestrian property with barn/arena, consider the possibility of setting it up as a business loan.
- If you find land that you’d like to build on, then you could consider a staggered construction loan.
- If you find a property that is a major fixer-upper, you need a bank loan and NOT a traditional mortgage. Once the property meets inspection criteria, then you could always refi and move into a mortgage.
Most of all, don't get discouraged. If you partner with THE REAL ESTATE COWGIRL, there IS usually a solution! Knowing what the current financial climate is is half the battle.
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