Frequently Asked Questions
- What’s the difference between Landbank and AgGeorgia Farm Credit?
- Who qualifies for Farm Credit/Landbank loans?
- How is a Farm Credit loan different from a commercial bank loan?
- How do I know how much house I can afford?
- What is the difference between a fixed-rate loan and an adjustable-rate loan?
- How is an index and margin used in an ARM?
- How do I know which type of mortgage is best for me?
- What does my mortgage payment include?
- How much cash will I need to purchase a home?
What’s the difference between Landbank and AgGeorgia Farm Credit?
AgGeorgia Farm Credit has been specializing in agricultural and land financing since 1917. We provide credit and related services to producers and business in 79 counties in Georgia. AgGeorgia is part of the nationwide Farm Credit System, the single largest provider of agricultural credit in America. As a cooperative, our borrowers are eligible to receive money back in the form of patronage refunds on the interest they paid if the company makes a profit.
Landbank is a service provided by AgGeorgia Farm Credit to promote financing of land. We can help you finance land as an investment, a hunting or fishing retreat, for a home in the country, a place to keep and enjoy horses – for just about any reason. Landbank loans are also available for home mortgages, construction of buildings, equipment purchases, working capital or land improvements.
Who qualifies for Farm Credit/Landbank loans?
Traditionally Farm Credit has financed land, operating expenses and equipment for farmers and ranchers. The Landbank loans offer competitive financing to just about anyone interested in purchasing land or who is looking for a home mortgage, whether in the country or urban areas.
How is a Farm Credit loan different from a commercial bank loan?
Commercial banks and most businesses return their profits to their owners, not their customers. When you borrow from Farm Credit, a cooperative, you become an owner of the business and are entitled to share in the profits of the association through the patronage refund program. Patronage Refunds benefit borrowers by reducing your cost of borrowing. Click here for more information about Patronage Refunds
How do I know how much house I can afford?
Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Give us a call, and we can help you determine exactly how much you can afford.
What is the difference between a fixed-rate loan and an adjustable-rate loan?
With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest changes periodically, typically in relation to an index. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us.
How is an index and margin used in an ARM?
An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR).
How do I know which type of mortgage is best for me?
There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. AgGeorgia Farm Credit can help you evaluate your choices and help you make the most appropriate decision.
What does my mortgage payment include?
For most homeowners, the monthly mortgage payments include three separate parts:
- Principal: Repayment on the amount borrowed
- Interest: Payment to the lender for the amount borrowed
- Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.
How much cash will I need to purchase a home?
The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:
- Earnest Money: The deposit that is supplied when you make an offer on the house
- Down Payment: A percentage of the cost of the home that is due at settlement
- Closing Costs: Costs associated with processing paperwork to purchase or refinance a house
