Friday, September 30, 2011
Many people are aware that timberland has become a good and stable investment, especially given the recent performance of the stock market. But, how do you pay for it? Most people, like myself, do not have the cash. As noted in the attached article, http://finance.yahoo.com/news/Rate-on-30year-mortgage-falls-apf-1324230167.html?x=0&sec=topStories&pos=main&asset&ccode, interest rates for homes are falling. Does this apply to land loans, more specifically Alabama? Most of the time, yes. The trends are similar but it is unusual to get as low of an interest rate for rural property as you can get for a home. The conventional banks tend to have tougher standards for land loans and usually require a higher down payment. I’ve talked to a representative of a lending institution and given certain criteria and qualifications, they can lock in an interest rate up to five years for less than five percent and will loan up to 80 percent of the appraised value. The two institutions that specialize in lending money for rural land in my part of Alabama are Alabama Farm Credit and First South Farm Credit.
Whether it’s for recreational land, timberland investment, or a combination of the two, these two institutions have money available to lend.