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Our Local Banks Won’t Refinance Our Country Property. – Jeff

Written by Steve Rhode

“Dear Steve,

Our mortgage was paid off in 2000. We refinanced in 2003 at 5.37%

we owe 130,000.00. Went back to same lender to refinance for a lower rate (2.95 at the time) and everything was perfect as far as income/debt/credit, etc….however, they could not find enough comps for the appraisal.

The work-up appraisal was 200,000.00….however the comps they found were not within a 30% adjustment, so they wouldn’t approve. We have 15 acres of property, a brick home, 2 barns and pasture for cows. None of the local banks will touch property loans over 5 acres.

any suggestions?????

We’re only looking for that lower interest rate.

The original lender (and the one who turned us down this time due to the appraisal) was Farm credit.

hahahaha wouldn’t you think they would work with 15 acres???? fenced pastureland with cows. sounds like a farm to me!


Friesian Dairy cows in a green pasture.

Dear Jeff,

Finding financing for non-income producing farm property is very tough. And many rural banks are only making one year renewable loans on such property. That means each year you have to hope they will renew it or you owe the entire mortgage.

If you had an active agricultural income producing operation on the land, that would be a different thing and probably make things easier.

Your local banks will be the most likely source of such funds and a 5.37% rate on essentially raw land is a pretty good deal.

I don’t know what state you are in but here is what one lender in Texas says.

There are several reasons why raw land is difficult to finance, namely because raw land is far more difficult to appraise than a home or commercial building in a populated area. Issues like easements, topography, zoning, the history of the property, drainage, and other factors make no two parcels of land similar. The concept of an appraisal is to find “like” properties and compare the known value with the unknown values. With raw land, finding a suitable comparison requires a significant amount of effort. Banks in Texas are very reluctant to loan money on raw land, and regulators are weary of the banks that have loans against raw land. – Source

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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