Kara Miller & Nicole Myers, Farm Credit Home & Land Loan Officers

When considering the purchase of their first home, many prospective buyers aren’t sure where to start. Most have a clear vision of their dream property, but don’t know what they can afford, how to obtain financing, or what they should do to prepare.  Over the years, Farm Credit’s Home and Land division has helped thousands of first-time homebuyers successfully navigate the purchase process.  While each situation is unique, there are some principles that are broadly applicable and will prove helpful to anyone seeking homeownership. 

1. Establish Good Credit History

• Make on-time payments on any outstanding debt. Late payments will negatively impact credit scores and will be a disadvantage to those seeking mortgages.
• Avoid making minimum payments if possible. Try to pay your credit card balance in full each month.
• Develop—and stick to--a budget. Make sure that any new charges can be paid off monthly. This will reduce the amount of interest paid and will enable more of your payment to go toward paying down balances. 

2. Save! Save! Save!

• Save up money for down payment and closing costs. While a down payment of 20% or more can significantly reduce borrowing costs, there are financing options that require far less down--3%, 5%, 10% or even 0%. Closing costs will vary, due to differences in loan amounts and property types, however they typically range from 5-8% of the loan amount. Planning ahead and saving for these expenditures is key!
• Short-term sacrifices can produce great savings in the long run.
• Larger down payments often lead to reduced rates and more financing options.

3. Find a Lender and Explore Options

• Talk with your lender about the different loan options available.
• Do some research into products that may be applicable to your financial situation and goals. Private Mortgage Insurance (PMI) can be a new home buyer’s best friend, if a 20% down payment is out of reach.
• Plan for the costs associated with purchasing a home, which can include lender fees, title and legal fees, appraisal fees and realtor/broker fees.

4. Get Pre-Qualified

• Work with a lender to determine what price point you can afford.
• Don’t make any big purchases or major life changes after you get pre-qualified.  Lenders base their decisions on the circumstances presented to them; if there are changes to employment or debt load after pre-qualification, the pre-qualification may be revoked.
• If you don’t get prequalified for your desired purchase right away, it’s not over! Your lender will help guide you on the steps necessary to secure pre-qualification in the future.
• Interest rates are higher than they were in 2020, so ask your lender about any programs that would allow for downward adjustments if interest rates were to fall during the term of your loan.  Note modifications or refinancing may be options.  

5. Work with a real estate agent to find your dream house

• Many real estate agents are very knowledgeable with specific types of homes-- farms, large acreage, or residential properties, for example. Do your research on who specializes in the type of property you want to purchase.
• Springtime is typically when inventory peaks and more houses come on the market.
• Be patient-- the right opportunity will come!

To learn about the financing options available through Farm Credit, please visit horizonfc.com/loans.

Kara Miller has been a Farm Credit Home and Land lender for over five years. She specializes in home construction loans on larger acreage properties and has financed everything from traditional stick builds to bardnominiums.

Nicole Myers has been a Home and Land lender with Farm Credit for the last three years. She specializes in financing new home construction and bare land purchases.

Horizon Farm Credit announced the launch of its Grow Ahead program, which features new financing options to help the next generation of farmers access the capital they need, as well as educational offerings, mentoring opportunities, and grant programs to help them establish and grow successful operations.

Loans through the new Grow Ahead program feature discounted pricing, reduced fees, customized loan terms, and relaxed underwriting requirements. Grow Ahead loans for young and/or beginning farmers can work in collaboration with FSA loan programs and are eligible to receive patronage.

In addition to new financing options, the Grow Ahead program offers grant and award opportunities, including the JumpStart Grant Program, which awards $10,000 grants annually to top applicants in the start-up phase of business with less than two years of farming experience, and the Farmers on the Rise Award Program, which gives $10,000 awards to top applicants with more than two years of farming experience.  

Grow Ahead also brings together educational and mentoring resources to help farmers achieve their goals. They can develop business plans and farm business management skills through Ag Biz Basics and Ag Biz Masters educational courses. Through a partnership with the SCORE network of business professionals, beginning farmers can be paired with a mentor who is well-established within the agricultural industry. 

“The future of our industry depends on young and beginning farmers,” said Tom Truitt, Chief Executive Officer of Horizon Farm Credit. “Farm Credit is committed to ensuring that they have the tools they need to start and grow their operations, achieve their dreams, and realize long-term financial success,” he continued. “We’ve developed the Grow Ahead program specifically to meet the needs of these farmers and are excited about the opportunities it presents for them. I hope that those eligible will take full advantage of the valuable resources available through this program.”

Grow Ahead offerings are available to both full-time and part-time farmers within the Horizon Farm Credit footprint. Visit horizonfc.com/growahead to learn more.

Horizon Farm Credit reported strong financial positioning in its 2022 Annual Report. Horizon Farm Credit was formed July 1, 2022, with the merging of AgChoice Farm Credit and MidAtlantic Farm Credit--both successful and respected Associations.  Horizon Farm Credit showed continued growth in loans and strong earnings from the point of its establishment throughout the remainder of 2022.

As a result of the merger, loan volume grew to just over $6.0 billion, an increase of approximately 99.2 percent compared to $3.0 billion in 2021. Net income grew over $31.4 million, a 35.3 percent increase compared to $89.0 million in 2021. Credit quality continues to remain strong with acceptable credit quality at 97.0 percent for 2022. The merger also created a positive shift in the commodity concentration and strengthened the agricultural diversification of the Association’s loan portfolio.

“Our Association grew significantly in 2022, with respect to our footprint, membership, and our ability to serve agriculture,” said Tom Truitt, Chief Executive Officer of Horizon Farm Credit.  “The formation of Horizon Farm Credit and its strong financial performance has positioned us to continue to meet the needs of producers in our territory, grow our industry, and support our rural communities for years to come.” 

In 2023, Horizon Farm Credit will be distributing a combined total of $91 million of its 2022 earnings in cash patronage directly to its member-borrowers. “Our patronage program is something unique to Farm Credit, and one of the many benefits of being a cooperative,” says Truitt. “It’s gratifying to be able to share the Association’s success with our members and their families.”

Horizon Farm Credit recently announced a patronage distribution of over $91 million in cash to its members this year, significantly reducing their cost of borrowing.

“Our unique cooperative structure sets us apart from other lending institutions and allows our member-borrowers to share in the profits of their Association through patronage,” says Tom Truitt, Chief Executive Officer of Horizon Farm Credit.

Horizon Farm Credit was formed through the July 1, 2022 merger of AgChoice Farm Credit and MidAtlantic Farm Credit.  As a result of the mid-year merger, patronage earned during the first half of the year was calculated and distributed separately from that of the new Association. $38.2M in patronage was distributed in January, which covered earnings through both pre-merger entities.  $52.8M in patronage was distributed this week from Horizon Farm Credit, bringing the total patronage distribution for 2022 to $91M.   Going forward, Horizon Farm Credit expects to return to a single patronage disbursement in March/April.

Horizon Farm Credit is a part of the national Farm Credit System.  Each Association determines its patronage payout, which is dictated by its total income, expenses, market conditions, and the Association’s bylaws.  All patronage distributions are at the discretion of the Board of Directors, whose objectives are to ensure financial stability, fund future growth, and maximize returns to members.

 “Our cooperative structure has served our borrowers well for many years,” says Brian Rosati, Chief Financial Officer for Horizon Farm Credit, “and we are committed to ensuring that the patronage program remains strong.”

To learn more about Farm Credit’s patronage program and to calculate your patronage distribution, please visit horizonfc.com/patronage.