If you love quiet living and spending time in the great outdoors, there’s no better place for a full-time residence than a rural home. However, financing a rural home is different than financing a home in the city, so you’ll have to keep certain considerations in mind. Here’s what you need to know before you buy that little slice of paradise out in the country.
Financing Homes with Over 10 Acres
Acreage matters when financing a home. Most mortgage companies will only finance homes with up to 10 acres. For larger tracts of land, they’ll split financing into two loans: a traditional home loan and a land loan with another lender.
If you’re looking to finance a property with more than 10 acres, you should consider working with a farm and land lender like Alabama Ag Credit. Since we’re more familiar with acreage and large properties, we can combine the land and home into one loan, minimizing closing costs and making the process simpler for you.
The Uniqueness of Rural Homes
In towns and cities, homes tend to be fairly similar and close together, making it easier to find comparable sales. When it comes to rural properties, however, there’s a lot more variety and factors to consider. Unfortunately, not all lenders use appraisers who understand how to accurately value acreage, future construction, outbuildings, or unique home types like a barndominium or a log home.
Working with a farm and land lender who’s more familiar with rural financing will ensure that your property will be properly appraised. At Alabama Ag Credit, for example, we rely on real estate appraisers who specialize in rural properties and who will understand how to adequately gauge their value, leaving less room for error.
Lower Your Property Taxes with an Agricultural Valuation
One of the benefits of purchasing a rural home is the potential to earn income, such as by producing hay, timber, crops, cattle, honey, etc. To understand what opportunities you might be able to take advantage of with your property, you’ll first have to know what’s available to you.
Start by asking the local tax office whether the property you’re interested in has an existing agricultural valuation, as this may lower your property taxes. Your lender may also be able to help discover additional agricultural uses if they specialize in farm and land lending.
Unfortunately, some lenders and conventional banks may require you give up the advantage of generating revenue when financing a rural home because they aren’t comfortable working with land that has agricultural use. Even if they will allow you to make income with your property, they may not understand everything that goes into the process that could affect your financing.
As a farm and land lender, Alabama Ag Credit is happy to finance your rural home, whether it has an agricultural use or not. In fact, we can even help you to assess whether you can make agricultural income from your land. After all, we’ve been helping buyers purchase rural homes and turn them into revenue for over a century!
Infrastructure, Improvements, and More
Your rural home may need some repairs or renovations to fit your needs. A fixer-upper can be a great investment, but you should know exactly what you’re getting into and what repairs and improvements you’ll need to make once you become the owner, whether that’s as simple as installing internet and building a fence or as big installing a septic system and constructing outbuildings. If you’re purchasing a land-only property that you plan to build on, you’ll also want to come up with an estimate of how much it will cost to do so.
Conventional lenders and banks might not be familiar with how to handle these various scenarios, but at Alabama Ag Credit, we specialize in this kind of financing. We’ve seen it all, which is why we offer options for everyone and every type of financing situation. Not only do we have a variety of flexible loan options for home improvement and financing land-only properties, but we can even help you buy livestock and farm equipment if that’s on your to-do list.
The Right Fit
At Alabama Ag Credit, we focus on making financing for rural communities and agriculture a headache-free process. If you have any questions about buying a rural home or property, we’d be happy to help! Contact us today to start discussing your options, or explore our website to learn more about us and what we do!