Associated Farm Mortgage, Inc.

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

When choosing a 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 may not want a fixed rate product (be sure there is NO pre-payment penalty regardless of product). Pick an ARM (Adjustable Rate Mortgage) that fits your plans.

However, if long term 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 may make sense for your needs. We offer Ag mortgage loans with terms from 10 to 30 years, and amortizations from 10 to 30 years.

We offer various ARM (Variable Rate) 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 may change prior to the maturity of the note. Some of our ARM products become an annual adjustable mortgage at that time, and then simply roll over for an additional 1, 3 or 5 year period. 

Amortization and Term for our loan products range from 10 years to 30 years in 5-year increments.

When comparing rates on products it is critical that you compare like products.  Do not expect a 30 year Fixed rate to have the same interest rate as a 1 year variable or ARM.

For specific information about current Interest Rates and/or questions about a specific loan product(s) drop us an email at jgk@afarmmortgage.com or complete our preliminary application.

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

• “Term” - the length of time from close to maturity expressed in years.
• “Amortization” -  the length of time expressed in years the scheduled payments will take to fully pay off the loan. This assumes a static interest rate.
• “Maturity” -  when all remaining principal and interest is due on the note.
• "Balloon Payment" - IF the Amortization is greater than the Term there will be a balloon payment due at the conclusion of the Term (maturity). Balloon payments always pose additional risk for you as the borrower. This is not to say they should never be utilized, but just be aware of the risk factors.
• “Prepay Penalty” -  notes that carry this clause have a built-in penalty (additional charge) for making principal payments in advance of the scheduled amortization. Please note NONE of our loan products have any prepayment penalty.
• “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", you need to make absolutely sure you fully understand the terms, and you have obtained adequate legal and tax advice. 
• “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.
• “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.

Associated Farm Mortgage requires 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.