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Loan products 

Long-term ag real estate loans are our single product, we do not offer operating loans, equipment, or construction loans. 

When choosing a farm mortgage loan product, you need to pick a product that fits your individual needs.  If there is any probability that you will need to pre-pay, or refinance in advance of maturity, then you don’t want a fixed rate product.  Pick an ARM (Adjustable Rate Mortgage) that fits your plans. 

However, if rates are low (relative to the last 10 years) and you have no plans to pay the note in advance of its scheduled payments, then a longer term fixed rate makes sense for your needs.  We offer ag loans with fixed rates for up to 15 years on 10, 15, 20, and 25 year amortizations. 

We offer various ARM products, meaning the rate is subject to change at some point in the future.  This may be 3, 5, 7, or 10 years away but the rate will change prior to the maturity of the note.  Some of our ARM products become an annual adjustable mortgage at that time, and others simply roll over for an additional 3 or 5 year period.  Amortizations for our ARM products range from 10-25 years as needed. 

The majority of our products are listed on our interest rate page. You will note that the longer you wish to fix the rate, the higher the interest rate.  When comparing rates and terms, it is important that you compare like products.   

Some terms you need to understand when examining various loan products: 

  • “Term” - this is the maturity of the note expressed in years and it may be less than the amortization, which means there will be a balloon amount to be rescheduled at maturity.
  • “Amortization” -  the period of time it will take for the proposed payment and interest rate to fully pay off the note, this can be greater than the term.
  • “Maturity” -  when all remaining principal and interest is due on the note.
  • “Prepay penalty” -  notes that carry this clause have a built-in penalty (additional charge) for making principal payments in advance of the scheduled amortization.
  • “Yield Maintenance” -  another way of saying severe prepay penalty, in short it means you will pay any difference between the rate of the note and the yield on treasuries for the same term to the maturity of the note.  This can be a VERY SEVERE penalty.  Prior to signing any note with “Yield maintenance” (we offer some), you need to make absolutely sure you fully understand the terms.
  • “POP” -  Partial Open Prepayment, which means there may be a defined prepay penalty under certain circumstances; like during the first five years of the note.  We offer a “POP” product that has a “5, 4, 3, 2, 1” prepay penalty. 
  • “5,4,3,2,1” -  means any part of the note that is prepaid during the first year carries a 5% penalty, what is prepaid during the second year carries a 4% penalty, etc. after year 5 there is no prepay penalty – or “open prepayment”. 

Associated Farm Mortgage, Inc. offers a wide variety of Agriculture real estate mortgages.  In all cases we require a first lien position on the collateral property.  The collateral must be land that has some type of real agricultural production.  It can be as simple as grazing pasture but cannot just be land without production.  We do not offer development or speculation land loans.