In today’s economy making a living as a farmer is tough enough, but dealing with mortgage debts on the farm land can be quite tricky. Farmer must not only make profits to make their living, but their entire income potential is the base for their home and workplace. Owning a farm means working and living on a piece of property that is crucial for the success or failure of your livelihood, which brings a lot of pressure. The biggest concern with farm land that is facing foreclosure is how to keep the land, property, crops and equipment.
Resolving Farm Debts
One solution may be refinancing the mortgage loan on the land. While this may be able to lower payments and keep a farmer out of the danger of immediate foreclosure, it can be quite costly. Refinancing mortgages brings out of pocket expenses by way of closing costs. Since a piece of farm land is likely to be valued much higher than a traditional mortgage loan on a home, these fees will be much higher. Refinancing land is also more difficult to obtain through a lender if they feel the farm is losing profits and has the potential to fail in profitability in the future.
Loan modifications are rare in land mortgage contracts and an alternative may be to sell off portions of the farm to investors. This also can be tricky business as the farmer needs to be careful about selling assets when it comes time for dividing up profits. A farmer may be able to sell off a portion of the land debts without sacrificing much of the rights to crops or potential profits. The trick is finding the right amount of investors for the right portions of the farm’s assets that doesn’t jeopardize profitability or potential income.