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IL near StL | OK, I'll try to give you the basics as I understand them. First of all, there is a Farmer Mac 1 (less paper work, requires higher levels of down payments or higher level of asset value to loan value and also runs a higher interest rate than FM2) and a Farmer Mac 2. FM2 is a gov't guaranteed loan and thus the interest rates are lower but there is more paperwork involved and more hoops to jump through. There is a 1 1/2% fee on the FM2, not sure about the FM1 but guessing that if it's not the same it would be close. Farmer Mac is a secondary lender and at least in my case and it's probably the same everywhere, you will work with your local bank who will actually process and service the loan. I can also tell you that you won't know what your interest rate is gonna be until the loan is basically done, approved and locked in. You are basically spot pricing your interest rate on the day you lock it in. That worked to my advantage this time because we really didn't expect a rate that low when we started the process. Another thing that I should mention is that it's a slower process. Now this is where it starts getting a little trickier and I've had this conversation with my banker, many banks don't want to mess with these because they are a lot of work for them, they are off balance sheet loans for the banks (money is Farmer Mac's) and I've also heard that there can be some variance in local FSA offices with regard to willingness to work with the borrower and bankers. The banks obviously have a margin to work with on these loans in order to recoup their costs. I consider us fortunate in that we have a lender that is committed to ag and began working with these Farmer Mac loans many years ago because they saw a benefit to their ag customers. We also have an FSA office that is willing to work with the banks and borrowers. I did ask if there was someplace to go to find participating banks and the answer that I was given was no but if you are thinking that you might pursue a Farmer Mac loan, you might talk to the credit folks at your local FSA office, it will end up going through there anyway. If you have any other questions, my email is good though I'm far from an expert on these. There is a Farmer Mac website but I just looked at it and didn't find it that helpful.
Edited by J SWIL 1/17/2021 11:50
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Interest Rates Question
