Interest rates are on the rise. Where does that leave you, the buyer?
When supporting buyers as they finance rural land, we’ve found the nuances of interest rate changes to be both a frustrating and limiting piece of the land ownership puzzle. But land can be affordable, even with interest rates on the rise!
In September of 2022, the Fed delivered the second big rate hike of the year, up by three-quarters of a percentage point from the already increased rates of July. Forecasts predict yet another rate hike by the end of the year.
In this fast-paced market, rising interest rates could make or break the offer you place on the table for your dream property; it’s essential to have the right expertise on your side.
As a buyer, getting connected to a Whitetail Properties Land Specialist in the area where you want to buy is a great first step. To summarize the wisdom from Land Specialist Wesley McConnell: Not only do we connect you with the land, but we also connect you with the right lenders who help you get a clear picture of your finances and creative ways for you to afford the property of your dreams.
What are the options for financing rural land?
Look for the potential value of a property that may not already be spelled out in the property description. For example, unused timber and farmland can add value to a potential property. We help you navigate the value in the property you’re considering, along with maximizing the financial value of your own property if you’re looking to sell.
Partnering with a trusted lender is the best way to ensure you have options when it comes to financing your purchase. Did you know that shorter term fixed interest rates are lower than longer term interest rates, or that flexible interest rates may lower your total payments over the life of your loan? Your lender knows these ins and outs! You may find that flexible down payments, a variety of loan terms, specific terms for constructing on your property, or other specialty financing options will allow you to purchase that perfect property.
Nathan Perry at Rural 1st explains one unique conversion option for interest rates:
“At Rural 1st, we don’t sell our loans, so we service them for the life of the loan. That allows us to offer a conversion option on all our loans. Once a customer has had their loan for at least one year, then they can lower their interest rate if rates fall in the future. For example, if someone closes at 6% and then two years from now interest rates drop to 5% then they can lower their rate to 5% for a small fee. There is no new application or appraisal to complete the interest rate conversion. Interest rates are higher now than they have been in 15-20 years, so there is a good chance they will decrease in the future, which will create an opportunity to convert your interest rate down.”
I’m a new buyer. How do I approach this market?
Prepare, prepare, prepare! There is no substitute for an in-depth, in-person conversation with a Whitetail Properties Land Specialist or trusted mortgage lender. The first step will be to get prequalified, according to mortgage lender Nathan Perry at Rural 1st; the next step is to lock in your interest rate as soon as you can once you find your dream property.
Discussing your wishlist with us is another great way to engage in the first steps of the landownership process. Are you looking for 5 acres, 50, or 500? Are you hoping to continue a family hunting or angler tradition? Perhaps you’re interested in acerage, but willing to lease some land for local hunters? Looking to build your dream home on a new property?
We help you identify exactly what you’d like your life to look like when you step foot on your property each morning. This work can go a long way toward firming up your resolve when minor changes to the market would otherwise feel like a major blow to your plans.
How can we get creative to make the land more affordable?
Once you choose your property and place an offer, you can start getting creative with how you will make the most of the land.
Land ownership has a number of benefits you may not have already considered, including:
- Carbon credit
- Conservation easements
- CRP
- Timber appraisal
- Cash rent or crop sharing
Implementing an option to purchase or spacing your closing dates are additional creative options that may make your next rural property more affordable.
Nathan Perry at Rural 1st shares:
Navigating a land purchase is different than buying a home in a neighborhood. There are a lot of realtors and lenders who are good and experienced in selling and financing homes in subdivisions, but there are not many that understand the ins and outs of rural/land deals. Work with a real estate professional who has significant experience in land deals along with a lender who understands land.
In order to compete in this market, buyers must be prepared, connected with an experienced lender, and willing to learn the ins and outs of land ownership. We believe that everyone who wants to own land should be able to, and we’re here to help you realize your dream.
Reach out to your local Whitetail Properties Land Specialist today to learn more about securing your dream property at an affordable price!
