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Long-term real estate financing has advantages for farmersMarl Carter, Oklahoma City, Okla., has more than 30 years experience in financing farm and ranch real estate. He serves a large area, approximately eight states, from his Oklahoma City office. The majority of his loans are in the states of Oklahoma, Kansas, Texas, Arkansas and Missouri. Carter believes a long-term fixed-rate loan is a key ingredient to most successful farming operations. With the high costs of doing business today, an operator should have both a short-term and a long-term lender. Typically, the local bank provides the short-term financing for operating, cattle and equipment but the real estate financing is provided by larger companies that specialize in long-term lending. The local lender, with its lending limits, will be in much better position to meet the operation's short-term financing needs with the real estate debt being financed through a long-term lender. Many operators have never experienced the benefits of using a long-term lender to handle their real estate financing. Long term real estate lenders offer some benefits that may not be available through a local lending source. In addition to a local bank being in a much better position to meet short term financing needs, long term lenders that specialize in farm and ranch loans may offer more favorable loan terms. Interest rates may be lower and also fixed for a longer period such as 25 years. Further, a loan might be arranged with a fixed rate for five years yet the annual payment set as though it was for a 25-year loan. This keeps the annual payment lower providing more cash for the operation. These loans typically are eligible for prepayment, without penalty, each time the loan payment is due. Carter does not recommend any loan with strict prepayment language. In many cases, debt consolidation may greatly improve the operation in addition to "cleaning up" its balance sheet. As an example, an operator might have several smaller loans with higher repayment and higher interest rates that are not fixed. All these may be combined into a new loan with a lower fixed rate of interest and lower annual payment amounts. The end result for the operation is that it now has only one loan, one payment and one lender. Now is a good time to apply for a new loan prior to the typical rush during the first few months of the year. Presently interest rates can be obtained for as low as 6.95 percent. These rates are subject to change at any time. Carter makes loans for nationally known long-term lenders, some that have been making loans to farmers and ranchers for more than 50 years. In view of his many years' experience, a minimum amount of the applicant's time is required to process the new loan. Office hours from 7 a.m. to 9 p.m. are offered to provide better service to his clients. For more information, call 405-844-8787 or e-mail carterml@sbcglobal.net. 12/8/08 Date: 12/3/08 Advertisement
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