When you apply for a loan or some form of financing, your credit score will be used to help determine your interest rate and likely be a large factor in approval. This score is reflective of your overall financial health and tells the lender how likely you are to make payments on time.

HOW ARE CREDIT SCORES CALCULATED?

There are three consumer bureaus that collect and analyze credit information on consumers: TransUnion, Experian, and Equifax. These three agencies compile information on your open, closed and cancelled accounts. They also use public records to figure your credit score, including judgments, liens, and other public record items. The two most popular scoring agencies and reports are FICO® and VantageScore. Both scores vary from a range of 300-850 and consider the same five factors into the scoring model: payment history, debt owed, average age of accounts, types of credit in use, and new credit. Typically, the higher the score, the more likely you are to get the loan or financing request approved. Each lending institution has different cutoff scores.

If your credit score isn’t where you’d like it to be, you’re not alone and there are a few changes you can make today to set you up for success in the future.

5 TIPS TO IMPROVE YOUR CREDIT SCORE:

PAY YOUR BILLS ON TIME.

35% of your credit score is calculated with your payment history and even being just a few days behind can have a major negative effect on your score. Take a look at your accounts and determine what you need to do to get current on all of your accounts.

*Pro-tip: Set up payment alerts through your bank or even just monthly reminders on your phone to make sure you don’t miss another due date.

PAY OFF DEBT.

30% of your credit score is calculated with your amount owed on accounts. Reducing the amount of debt you have will help you avoid letting this debt grow exponentially. If you’re up to your elbows in credit card debt, stop using them. Take a look at all of your account balances and make an aggressive payment plan towards the credit card bills that carry the highest interest rate – these grow the fastest!

*Pro-tip: Don’t forget to make payments towards the smaller interest rate accounts as well. Ignoring the minimum payment on these will be a hit against payment history.

Be aware that paying off a collection account, or closing an account on which you previously missed a payment, will not remove it from your credit report and will stay there for seven years. If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor.

DON’T OPEN A LOT OF NEW ACCOUNTS RAPIDLY.

New accounts will bring down your average account age and have a larger effect if you don’t have a lot of other credit information built up. This can also look particularly risky to a lender.

BE DELIBERATE ABOUT RATE SHOPPING AND INQUIRING ABOUT CREDIT LINES.

If you’re looking for rates on a particular loan, try to keep this search in a focused period of time. FICO distinguishes between a search for a single loan and a search for a bunch of new credit lines partly by the length of time over which the inquiries are occurring.

BE DELIBERATE ON HOW YOU HANDLE CURRENT AND NEW CREDIT.

Closing unused credit cards as a short-term strategy to raise your score will not work. Similarly, opening a number of new credit cards that you don’t need, just to increase your available credit, won’t work either. Apply for new credit only as needed. This, combined with managing payments responsibly and paying off your debt, will help you re-build your credit score in the long term.

A few other important things to know:

• Avoid credit repair agencies that charge a fee to improve your score.
• It’s OK to request and check your own credit report. If you are ordering your credit report directly from the reporting agency or an authorized organization, it won’t affect your score.

WHAT GOES INTO MY FICO CREDIT SCORE?

Payment History – This comprises approximately 35% of your FICO Score.  It includes your payment history on numerous types of accounts such as credit cards, retail accounts, installment loans, and finance company accounts. It also looks at public records and collection items such as bankruptcies, foreclosures, wage attachments, and liens; gives the details on late or missed payments, and the number of accounts that show no late payments. 

The Amounts You Owe – Approximately 30% of your score is based on this. Credit utilization evaluates how much you owe compared to how much credit you have available. This takes into account the amount owed on all accounts, the amounts owed on different types of accounts, the number of accounts you have, the total credit line being used, and how much is owed on installment loans.

Length of Credit History – Approximately 15% of your FICO score comes from this. This includes how long your credit accounts have been established considering the age of your oldest, newest, and average age of accounts.  Also, how long specific credit accounts have been established and how long it has been since you’ve used certain accounts.

New Credit – This category comprises approximately 10% of your credit score. FICO research shows that opening several credit accounts in a short period of time represents greater risk–especially for people who do not have a long credit history. Some things FICO considers is how many new accounts you have opened, how long it has been since you opened a new account, how many recent requests for credit you have made, length of time since credit report inquiries were made by lenders, and whether you have a good recent credit history which would follow any past payment problems.

Types of Credit in Use – Approximately 10% of your credit score comes from this.  This is your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. It is not necessary to have one of each, and you should not open a credit account you do not plan to use. Instead, it takes into account what kinds of credit accounts you have and how many accounts of each type you have.

WHAT A FICO SCORE IGNORES

A FICO score considers a wide range of information, but does NOT consider:

• Race, religion, color, national origin, or marital status
• Age
• Salary, occupation, title, employer, date employed or employment history
• Where you live
• Any interest rates charged on credit cards or other accounts, or
• Any items reported as child/family support obligations

WHAT INFORMATION IS ON A CREDIT REPORT?

Earlier, we discussed a little about how credit scores are developed based off of credit reports that are developed by the three main consumer bureaus, TransUnion, Experian, and Equifax. All though they are all separate entities, the credit reports they produce will have some common categories of information:

• Identifying personal information like name, date of birth, social security number and employment information. This isn’t used to determine your credit score.
• Trade lines, or credit accounts that you have established. These are bank cards, car loans, mortgages, etc. They will show the type of loan, when you opened the account, your credit limit, account balance, and payment history.
• Credit inquiries from loan applications or other involuntary means, like the pre-approved credit offers you receive from a bank in the mail.
• Public records, like bankruptcies and lawsuits, and information on overdue debt from collection agencies.

Now that you know what goes into a credit score and how to improve yours, go check out your current accounts and see what you can do to set yourself up for financial success in the future.

The Farm Credit Foundation for Agricultural Advancement recently announced that Karl Binns has been appointed to their board of directors. He will assume his new role in January 2018.

“I have worked with Karl for the past two years through the Minorities in Agriculture Natural Resources and Related Sciences (MANRRS) program at the University of Maryland Eastern Shore, and can attest to his impeccable character,” says Cheryl Steinbacher, Horizon Farm Credit’s Senior Vice President of Human Resources. “Karl is respected by his peers and students, and has devoted his career and outside interests to education and improving the lives of young adults. We’re thrilled to have him join the Foundation’s board of directors.”

Binns is currently the lead development officer at the University of Maryland Eastern Shore’s School of Agriculture and Natural Resources, and serves as the school’s MANRRS advisor. This past year, he was awarded the Maryland State Department of Education’s Outstanding Change Agent for Postsecondary Education honor. Binns is also a member of the Baltimore City Extension advisory board, and is involved with the Maryland Council for Agriculture Education.

“It has truly been a pleasure working with the dynamic team at Horizon Farm Credit, as well as the entire Farm Credit System, through my leadership programs at University of Maryland Eastern Shore and with MANRRS,” says Binns. “Farm Credit has been integral in helping to attract a new generation of young people to the food and agricultural industry. I look forward to being a part of inspiring the next generation of agricultural leaders throughout the region.”

For more information about the Farm Credit Foundation for Agricultural Advancement, please visit FCFoundationforAg.org.

Buying land and building a house of your own can be a very rewarding process, but one that involves a lot of attention to detail. Whether you are currently in the process of buying land and building a home, or are planning to do so in the future, this article provides an overview of things to consider when buying your land and tips for building your dream home.

How to Find a Property to Build On

The first step to building a new house on existing land is vetting potential properties. There are many ways to find property to purchase including:

• Online
• Through a real estate agent or builder 
• Word of mouth in your community

When looking online, you can simply search for property for sale in your area. If you are working with a real estate agent, it is important to connect with them early, so they know your criteria and can flag properties that match what you are looking for as soon as they become available. If you already have a builder, it would be beneficial to consult with them as well, as they typically have many contacts to help you network. They’ll understand how to find land that can support building a new home and may be able to point you in the direction of lots for sale.

Another way to find property for sale is to ask around in your community. Some people may have land that is for sale that they have not listed yet or would rather sell their land to someone they know privately. Building your network and community will help you learn about this untapped sale method.

As you search for land, this is also a great time to start working with a lender. A pre-qualification will help you determine how much you may be approved for before you find the land you want to buy. Then you can create a budget and prepare for the loan amount. Learn more about how to buy land here.

What to Consider When Buying Land for Building

One of the most important things to consider when buying land to build a house is the location. You should determine where you would like to live and what factors are important to you before starting your search. Would you prefer to live somewhere more rural or right outside of a city or town? Will this make your commute longer or shorter? How close are you to amenities like grocery stores, hospitals and schools?

You will also need to pay attention to the zoning of the property. Is it agricultural or residential? These will both typically be acceptable to build on, but may differ in the amount of acreage that is attached. If you need more acreage to grow crops or raise cattle, an agricultural zoning will be a better fit for you. Each comes with their benefits and limitations, so make sure to do your homework.

Another question to ask is whether or not the land is Perc’d (had a percolation test done) and does it have a well located on the property? If the land has not been Perc’d, you will not be able to build because you will not be able to have a septic system. If it has been Perc’d, the listing will tell you how many bedrooms can be supported on that piece of property. The listing will also inform you if it has a well. If it does, you will see GPM, which stand for Gallons per Minute, and is measured in a ratio.

You will also want to look into what utilities and road options the property offers. Has the driveway been established and will you have to share it with your neighbors? Are there utilities already on the property or will they need to be added? Easements are also important to evaluate before picking a property. Easements are the limitations of what you can do with the property. For example, if the property is located in Forest Conversation, you will not be able to remove any wooded area from the property.

In addition, surveys may be required for title work for the property. A house survey will determine where the house location will be on the land. This is typically completed quickly and is not expensive. A metes and bounds survey assesses property lines and land markings, is typically more expensive, and can take a longer time to complete. Surveys are not always required when purchasing land, but this is dependent on the specific property.

Pros and Cons of Building a House vs Buying an Existing One

Choosing to build a house vs buy an existing home is a very personal decision and there are many pros and cons. 

The benefits of building a house include: 

• being able to personally customize the features and design 
• less short term maintenance  
• higher levels of energy efficiency

Some drawbacks include: 

• a longer wait time to move into the house
• how stressful the building process can be
• the potential for hidden costs you are not prepared for

It is very important to understand the time investment and overall cost it will take to build a home.

Is it Cheaper to Buy a House or Build a House?

This could vary depending on where you live, but it will likely not be cheaper to build a home versus buying a home that is already built. The overall cost is dependent on the current market conditions. Recently, land is selling for a premium and raw materials, like lumber, have seen all-time highs. Properties are in high demand and are selling for above the original asking price.  

There can also be additional fees when you build a home that you didn’t expect initially. Impact fees or township fees, depending on what state you are located in, are dependent on your county and are paid directly to your county depending on your household. This fee goes toward schools, roads and any county facility. Also, building permits, architectural fees and excavating fees will need to be paid up front. These fees will differ depending on the type of home you build. However, you can buy land now and build later.

How to Choose a Home Builder

Once you have bought the land, you’ll want to get to know potential home builders to determine who you’re most comfortable with. Do your research about the company and what houses they have built previously. Start with a quick internet search and request referrals so you can speak with a client they have serviced in the past. If you have the opportunity, you may want to walk through properties they are currently building.

You’ll also want to make sure you understand the contract, the builder’s plans and the timeline before you sign on the dotted line. To end up with your dream house, you need to understand what the builder is doing and why they are doing it in that way. This will also help ensure that the builder sticks to the timeline you agreed upon.

Additionally, prepare to have saved cash reserves for unexpected costs that could occur with building a home. Having a cash buffer will help you pay for those costs quickly to stay on track with your timeline. There will also be upfront fees that are required in your county and state that you’ll want to prepare for.

What Types of Loans Do You Need to Build Land and Buy a House?

When building your own home, there are typically two types of loans you'll need:

Lot Loan Options

Before needing a construction loan, you may need to start with a lot loan to purchase the land you want to build on. Farm Credit offers lot financing with a 20% down-payment with five, ten and 15 year fixed terms. It must be established as a buildable lot, which means it has already been Perc’d. 

But, you do not need to have a timeline for when you are planning to build. This means that you can wait for as long as you need to start building your home.

Construction Loan Options

Farm Credit offers 15 and 30 year construction-to-perm loans. During the building phase, you will only pay interest. This means once you have finished the 12 month construction period, the loan will revert back to a 15 or 30 year term. 

You must have a registered builder - no self- building is allowed. You can clarify if your builder is registered by checking your state’s attorney generals website by searching your builder’s name. Farm Credit will finance up to 95% of loan to value, which is determined by the appraisal. Mortgage insurance and escrows may be required depending on your appraisal. There will also be a 10% cash reserve requirement before receiving the loan. This will ensure that you have some funds in case of an unexpected cost.

How to Get a Loan to Build Your House

Before you can get approved for a loan, you’ll want to make sure you have a good credit score - this means 700+. Before you are approved, you will also be evaluated based on the cash you have on hand. If you have more cash on hand but a lower credit score, this may help you get approved. 

You will also be evaluated on repayment ratios. You do not want your debt ratio to be over 40%. The debt ratio is determined by taking your housing cost plus any other loans and credit cards you have and dividing that by your gross monthly income. Your lender will also ask for supporting financials like tax returns, W-2’s, bank statements, paystubs, and profit and loss statements, if you’re self-employed.

Things to Avoid when Buying Land to Build a Home

When buying property, building a home, or applying for a loan, you should avoid making expensive purchases. Big expenses could affect your ability to get approved for a loan, so be sure to check with your lender before doing so. It is not recommended to get a new job, switch banks or move money around within your bank accounts. All of these actions could cause a delay in getting a loan or not receiving one at all because of how it affects your credit score. A lender will be notified with any change in your credit during this process.  

Things to Do when Buying Land for a Home

To increase your likelihood of being approved for a loan, make sure to make your current payments on time, especially your rent or mortgage. It is also important to keep all paystubs and bank statements in case your lender needs them for evaluation. Also, returning all paperwork on time will help keep the processing moving. These actions cannot guarantee a loan, but can certainly help you and your lender. 

Sample Draw Schedule for Construction Loans

A 12 month construction loan comes with a sample draw schedule to prepare you for your building process. Each percent listed below is a typical example of how much of your loan would go towards that part of the building process:

20% will go toward the foundation draw, which is site preparation, excavation, footings, foundation walls, and waterproofing.

20% will go toward the framing draw, which includes outside and inside wall framing, roof framing, roof sheathing/felt, and roof shingles.

The windows and door draws receive 10% of the loan, which includes installation of the windows, exterior doors and skylights.

25% will go toward the drywall draw, which is the basement and slab concrete, rough-in plumbing, rough-in electric and wiring, rough-in HVAC, exterior siding being completed, outside wall insulation, drywall hug, drywall finished and ceiling textured, and well work and septic.

15% will be for the trim draw, which is the interior doors, interior trim, cabinet installation, and counter tops being installed.

10% will be the final draw, which will be the completion of the home according to the construction contract, including the seeding, grading, driveway, carpeting, resilient flooring, and final approval from all inspecting authorities in the county where the house is built.

At the completion of the house, it must also have a certificate of occupancy, which will be provided by the County or Township Authority. Everything must be compliant with their codes before you will be approved to move into your home.

Buying land to build a home can seem overwhelming but with careful preparation it can be a fulfilling process. To learn more, contact a construction loan officer at Horizon Farm Credit today.

David W. Cavey is the owner and President of North Central Insurance Agency, an independent insurance agency offering farm insurance and many other insurance products throughout Maryland and Pennsylvania.

For the purposes of today’s discussion I will concentrate on Greenhouse Insurance as it applies to a farm insurance policy. If you have a commercial nursery operation then you most likely, or should have a commercial insurance policy and that deserves its own discussion.

With the farm to table movement many small sustainable farms are popping up and that’s a great thing. Both new and seasoned farmers are getting into this market. To ensure the natural process and get a jump on Mother Nature many farmers have constructed Greenhouses. Here are a few things that can keep insuring your Greenhouse from growing into an issue:

• A Greenhouse is considered a Farm Structure. Although some farm policies allow a grace period to add a new structure, farm structures are not automatically covered. You have to contact you agent or company representative to add the structure.
• Insurance companies want to make sure that your Greenhouse is of sound construction. A plywood structure with thin ply plastic covering may not cut it. Older glass panel Greenhouses can also be an issue. Hoop Houses, that are popular now, are usually acceptable. The insurance company wants to make sure that it is secured properly. If the structure is permanently secured on a masonry foundation they may offer discount pricing and broader coverage. Some insurance companies may not offer “broad” form coverage on Greenhouses. This would eliminate collapse from weight of ice and snow. So be sure you ask about the coverage that is being offered.
• Make sure that you are insuring your Greenhouse to the proper value. Most insurance companies require that farm structures are covered for at least 80% of the Replacement Value under Actual Cash Value coverage. Insuring it for a lessor value could cause settlement issues if a claim arises. If you’re not sure what value to insure your Greenhouse or any farm structure your agent or company representative should have construction value software available. Depending on the age and construction of the structure, replacement cost coverage may be available.
• Contents of a farm structure are not typically included in the structure value. They have to be added to the Farm Personal Property section of your farm policy. If items such as your heating and lighting system or racks are permanently installed then they are typically included in the structure value.

We have just touched a few items about insuring Greenhouses. Clear and honest discussion with a knowledgeable farm insurance agent is key in making sure you have the insurance you need.

Happy Growing!

The Farm Credit Foundation for Agricultural Advancement will be awarding at least $100,000 in scholarships to students who are planning to attend or are currently enrolled as students at a college, university, or technical school, pursuing a career in agriculture. The application will open online on September 24, 2021 and the deadline for all applications and supporting materials is January 7, 2022.

“The future of agriculture lies with our youth,” says Charles Wright IV, Chairman of the Farm Credit Foundation for Agricultural Advancement. “We encourage any student who plans to work in the agriculture industry to apply for this scholarship opportunity. You don’t need to be a farmer – this applies to what we like to call the ‘other side of ag’ as well, like being a teacher, veterinarian, loan officer, or engineer.”

The Farm Credit Foundation for Agricultural Advancement’s scholarship program will award at least ten scholarships in 2022, each valued at $10,000. This program is open to high school seniors and students currently enrolled in a two or four year educational program. All applicants must be planning to pursue a career in agriculture, and must reside within Horizon Farm Credit’s five-state territory or Washington D.C.

Applications are being accepted online now through January 7, 2022. For more information, please visit FCFoundationforAg.org or email info@FCFoundationforAg.org. Be sure to follow us on social media with the hashtag #OtherSideOfAg.

Raising and producing high-quality agricultural products can be extremely satisfying, but that’s only part of the equation to be a successful farmer. If you want to generate sales and revenue, you also must adopt a marketer’s mindset. While this may be unfamiliar territory for some beginning farmers, it’s easy to learn and apply the basics. Start thinking about the questions below to help you get started creating your own farm marketing plan.

What product are you marketing?

What you’re producing should determine how – and if you need to – advertise. For example, if you’re raising a commodity like grain for the local elevator, or raising poultry for an integrator, marketing from a storytelling aspect may not be that critical (in this situation, you’ll need to focus on your breakeven). But if you’re growing a niche product, marketing becomes far more critical to generating revenue. When defining and describing what you’re selling, it’s smart to consider:

YOUR PRODUCTS.

Your marketing efforts should help you build demand and distinguish your products from your competitors’. The most important thing to do is to let your customers know what’s unique about your products. Are they an unusual variety, or organic or heirloom? Many consumers are drawn to certain qualities, such as locally grown, sustainably raised or artisanal.

THE CUSTOMER EXPERIENCE.

If you’re selling in-person, you’re offering friendly, informed service and convenient hours. But if you’re selling to wholesalers, you’re offering flexibility and reliability in delivering your product.

YOURSELF AND YOUR OPERATION.

If you’re a new operator, you’ll need to do more marketing to let people know about you. Your story, including your history, farming practices, community involvement and social responsibility efforts, can be incorporated into your marketing messages so your customers can feel good about supporting you.

Who’s buying your product?

Identifying your target market is another important consideration before you can start marketing. You’ll want to determine who is interested in what you’re selling and then learn as much as you can about those consumers. Where do they live and work? What are their interests? And what are their distinguishing demographics, such as average age and income? You’ll soon realize that you likely have several target groups to which you can and should market to. One group enjoys visiting the farmers market, while another drives by your roadside stand. Or, suburbanites and college students. Or, direct consumers and wholesalers. You’ll want to craft unique marketing messages for each of these target groups.

What’s the state of the local and online market?

Understanding the current supply and demand for your products can help you determine how much money and effort to invest into marketing. If there’s high demand and low supply, simply letting customers know you have what they’re looking for may be sufficient. If there’s an abundant supply or low demand, you’ll need to put more effort into your marketing. Keep in mind that the laws of supply and demand change; it’s a lot easier to sell ice cream in the summer than during the winter!

The competitive landscape also impacts your marketing efforts and messages. You may be competing against other local producers, but you could also be competing with wholesalers, grocery stores, a community-supported agricultural group or even web-based companies. The way you market your products and the marketing messages you use will likely be influenced by your competition, so take note!

What are the best marketing tactics for a farm business?

Your product and the target market will determine the right marketing tactics to use. For example, if you have a farm stand and drive-by traffic is your target market, you’ll want great signage that is easy to read from the road quickly. Other great channels include:

SOCIAL MEDIA

When determining which social media platforms to use, do your research on what the typical user is on that platform and don’t overcommit yourself. For example, you’re more likely to reach a younger audience on Instagram, but consistency in engaging and posting is highly valued. If you can’t commit to being active on the platforms you choose, you won’t reap as many benefits as you could.

WEBSITES

A good website needs to educate your consumer on the product itself and how to purchase your product. At bare minimum, you’ll want to include contact information, hours of operation, and anything else that will help them purchase your goods.

SIGNAGE

Opt for large, easy to read signage, especially if your target market is driving. Think about positioning of the sign as well – angles matter.

FLYERS

Consider posting flyers in high traffic areas to spread the word. Make sure they are also easy to ready and not too cluttered with text or imagery.

PAID ADVERTISING (RADIO, BILLBOARDS, TELEVISION)

You’ll likely be solicited by a number of advertising representatives to buy into paid advertising, which can be a great marketing avenue when done correctly. Whichever you decide to pursue, make sure to ask your rep about the best practices to run campaigns and measure success. They should be able to give you marketing advice to help you see results and if they can’t, you need to look for a more knowledgeable rep.

“Marketing can be as simple as a Facebook post about what vegetables are available that day at the farm stand or a photo or video of an animal being born on the farm,” says Pennsylvania loan officer, Andrew Stutzman. “With a little research and planning, any farmer can develop and execute a basic marketing plan.”

Getting started

Developing a basic marketing plan is actually very simple. Here are some steps to get you moving in the right direction:

• Consider how best to reach your target market to determine your tactics.
• Write messages that differentiate your products, and encourage customers to buy from you.
• Plan when you’ll deliver your messages, keeping in mind that regular communication, especially on social media, is essential to building your brand.
• Execute your plan.
• Track your results so you can fine-tune your marketing efforts moving forward.

The great news is that marketing doesn’t have to cost much. Social media is free, and websites can be inexpensive to create. Costs rise with paid advertising like radio, of course, so you should carefully consider their expected return on investment before making an advertising outlay.

By creating your farm marketing plan, you develop a path to follow and more importantly, something to return to each year as your business grows and develops. Already have a marketing plan? Great! It should fit seamlessly into your farm business plan as well.

Do you remember that 1950s movie called “The Blob”, where a squishy substance overtook people’s homes and possessions? Well it’s back - not in the classic film’s sense, but in the form of saltwater. Were you aware that agriculture producers were coming to terms with their own version of “horror” just off of Maryland’s Eastern Shore (and coastal regions around the country)?

WHAT IS SALTWATER INTRUSION?

According to Wikipedia, "Saltwater intrusion is the movement of saline water into freshwater aquifers, which can lead to groundwater quality degradation, including drinking water sources, and other consequences."

This seemingly slow-moving saltwater issue is forcing farmers to abandon fields when they first see signs of encroachment - which has doubled in speed and reach over the last several years. This invasion is cause for the need of more support for farmers and natural resources alike.

There are five reasons for seeing saltwater intrusion and inundation:

1. Storms and high tides are causing extensive flooding in areas, not just in farmland, but also seeping into aquifers, and moving down into shallow water tables
2. Sea level rise
3. Droughts
4. Subsidence
5. The connectivity of the landscape (ditches) to salty water bodies.

Saltwater Intrusion on the Chesapeake Bay

In a statement from The George Washington University (GWU) Department of Biology, “The Chesapeake Bay is ground zero for sea-level rise. Due to a combination of climate change and natural subsidence of already low-lying land, the bay has some of the highest rates of sea-level rise in the world – approximately three times the global average.”

Dr. Kate Tully, Assistant Professor of Agroecology, University of Maryland (UMD) Department of Plant Science, has been studying sea level rise and saltwater intrusion on Maryland’s Eastern Shore. “Our study is noting widespread saltwater intrusion over many counties on Maryland’s shore,” she says. “We are seeing this all across the states of Delaware and Virginia, as well.” In Somerset County, Maryland, over a thousand acres of farmland have converted to salt marsh over the last eight years, and the pace of this loss is only expected to rise in coming years.

Saltwater intrusion is hard to predict, making it difficult for farmers to determine which fields to tend. This uncertainty is motivation for more data collection. Tully, Dr. Keryn Gedan at GWU, and Dr. Pinki Mondal at the University of Delaware are “working to produce maps of salt levels in soils and hand-dug wells, soil types, hydrogeologic layers, and ditches” (source: UMD).

In a recent interview clip by WJZTV, Tully expressed the importance of acting quickly. “We need to act now. The damage is already happening, but we often speak about climate change and sea levels as a future concern. Farms are already being lost at a fast rate.” Tully adds, “All crops on the Eastern Shore are not adapted to high salt levels. The issue is Maryland’s shore is only two feet above sea level, salt is pushed onto the fields and isn’t able to drain out.”

Tully’s motivation for saving Maryland’s natural resources stems not only from the bountiful food source the bay provides or the thriving wildlife population, but from the preservation of history. “Our history is going underwater,” she says. “Many of the first settler landmarks are becoming lost. Some of the farmers I work with can trace their land back to the 1630s, and they are the first to go underwater.”

Researchers are continuing to look for solutions to this issue while providing assistance to farmers. While they cannot turn back the tides, partnering with environmental agencies will allow them to prepare the Chesapeake Bay for upcoming changes. “We want to be able to help farmers find a crop that can provide income, if possible,” explains Tully. “I attend many roundtable stakeholder meetings. There are incentive programs for farmers, but we want to make it easy for producers to enroll, with as little paperwork as possible.” The Natural Resources Conservation Service (NRCS) is working hard to gain help for farmers by assisting to implement new plans and strategies. Tully also emphases how native marsh grasses store carbon, reducing nutrient loading into the bay. In the face of saltwater intrusion, it is critical to provide farmers with options that can support a clean and healthy environment while not putting them out of business. Tully and her team are tackling this challenge.

Tully concludes, “Aside from the constant forward march of the saltwater invasion, one fact we know for sure is that we need more research on this topic, and we need it fast.”

The process of buying land can seem confusing to those who have never done it before. No two properties are the same and many people have very different goals when it comes to what they want to do with the land they want to purchase. Some are investing for the long run, and others are ready to get started on their next project as soon as the paperwork is signed. No matter what your goals are, this article has everything you need to know about the process of buying land.

New: Click here to watch the video on how to buy land instead of reading!

What to know before buying land

Prior to purchasing land, it is important for you to know what you intend to do with it. Without a goal or a general direction of purpose for the property (and how you’ll use the loan funds), your lender won’t be able to determine how to best structure your loan. Unlike a property that already has improvements or structures (like fencing, access road, etc.) on it, the property type and purpose is undefined for bare land.

How to find land to buy

There are many routes you can take when searching for land. Some involve a little more effort but with a mixed approach, once you start looking for the opportunity to purchase land, you’re more likely to find what you’re looking for. Here’s how we suggest finding land to purchase:

ONLINE

One of the easiest ways to find land to purchase is online; all you have to do is search for “Land for sale in ___”. If you want to use more specific resources to find bare land, the Lands of America Network (Land.com) has many websites dedicated to land and bare land listings.

THROUGH A REAL ESTATE AGENT

Another good way to find land for sale in a specific area is to enlist the help of a real estate agent who knows the marketplace in which you would like to purchase. Real estate agents see new listings as they become live and may even know about potential listings before they are shared publicly.

GET ACTIVE IN THE COMMUNITY

If you haven’t already started building your network of professionals in the rural community, this can also be a viable way to help you find land for sale as well. Reach out to local commodity groups, builders, real estate agents and farmers to get involved in your local rural community and start talking to folks about what you’re looking for.

What makes a land loan different than other loans?

Land loans are inherently more risky for a bank because of the way land values fluctuate in the bare land market – there really isn’t much stability or consistency across the board.

As an example, it’s easy to get an appraisal on a home on an acre because there are typically many other properties that an appraiser can use to compare to get an accurate valuation. On the other hand, an acre sized property without a home has less comparable properties to accurately determine the true value of the property.  

The key thing to remember here is: every piece of property is different because of the land use it may currently have or has the potential to have in the future. Some tracts are uncleared and serve as timberland. Some tracts are zoned agricultural and will be used in production ag.

Another piece that feeds into determining land value is what kinds of structures or improvements have already been worked into this land. Buildings like barns and homes, or improvements like access roads, are going to alter the way the property is valued because there has already been some kind of investment made.

The unfortunate truth is that many regular banks are not willing to provide financing for land because of this risk – if a land loan is defaulted on, the only way to repay the outstanding debt is for the bank to take ownership of the land, which is not ideal for the bank or their balance sheet. This is a highly specialized area of financing which means you need to make sure you’re choosing a lender that understands your goals and wants to work with you.

What steps do we need to take to purchase the land?

This process is going to look different for each buyer – but don’t be discouraged. The most important things for you to figure out as a buyer are:

• Purpose for the purchase and the intent of use for the property,
• How you’re going to finance it (how much money you have for a down payment, what you can afford, etc.), and
• Who you’re using as a real estate agent (or maybe not).

Where to get a loan for land?

Many lenders offer financing for land and will structure loans specific to an intended use for the property – which can be good or bad. As an example, let’s say you want to buy land to build a home. With other lenders, you may get a loan that has a 1-3 year balloon that requires you to begin construction on a home at that time or forces you to refinance with another lender. Not great for you if you change your mind or your plans change.

Farm Credit understands that plans aren’t always set in stone, so we offer loans that are flexible to meet your needs, no matter whether your goals are long term or short term. We offer loans for bare land, loans for buying land to build a home, operating loans for agricultural purpose properties, and more!

Land Loan Application Requirements – How to tell if I am eligible for a land loan now?

If you haven’t found the particular property you may want to purchase yet, then a pre-qualification may be the best first step to make sure you are a qualified candidate to apply for the loan.

If you’ve already found the property and are interested in making an offer, you would continue with a formal application as a pre-approval. This would involve a formal qualification, and having the lender pull a credit score for each applicant. Farm Credit typically asks for several items of documentation, including: personal identification, income verification, and a list of assets/liabilities. You’ll want to make sure to give us a call before gathering all of these items, to make sure you don’t have to provide anything else. Because each piece of property is different, you may be required to submit other key pieces of information.

An important thing to note is: “One of the many misconceptions about Farm Credit is that we only finance farmers and that’s simply not true. Our membership is very diverse and many have full time jobs that help them afford their rural property that aren’t in agricultural production,” explains Kelsey Feeg, a loan officer in our Shoemakersville, PA office.

Pre-approval for land loan VS pre-qualification for a land loan – Which do I need and when?

The answer to this question really depends on where you’re at in your process. If you’ve already found the property you want and have an agreement of sale, then we would work this through our process as a formal approval.

A pre-approval may be the best choice for you if you have a few properties identified as potential purchases and would like a formal answer from our credit team. If you’re in a hurry to move on a property, or if you’re early in the process, then a pre-qualification may be appropriate. Speaking with a loan officer is the best first step in this process to determine how the potential application should be handled – we are happy to do both!

Loan Process – How to get a loan for land?

When deciding on which lender to get a land loan from, make sure to prioritize flexibility – after all, it is your land and your decision what to do with it! Often times, buyers say they know they want to construct a home on the property, but then their plans will change after the loan is written. Many lenders don’t factor this flexibility into your loan package which will likely cost you time and money if you have to restructure your loan or want to pay it off ahead of time.

With Farm Credit, members enjoy the ability to pay on their loan as scheduled, without disruption, and payoff the loan early if they choose, without pre-payment penalty fees.

The flexibility factor is especially true for a lot loan for which you might be planning a home construction in the future and even for larger tracts of farm land. You’re in charge of what you want to do with your land when you finance with Farm Credit. We also have long term fixed rates which give you the security to counter balance the flexibility previously noted.

If you’re curious about how to get a Farm Credit loan, check out our Loan Process Simulator and learn the step by step process.

Is special financing available for first time land buyers?

Because land is a specialized area when it comes to financing, there are not FHA type programs available for land. Because most of these types of financing programs would be held and serviced in-house by a bank, a minimum of a 20% down payment is typically required. This is especially true for a more residential type purpose for a land loan.

For a larger tract being purchased for farming or agricultural use, loan programs through the FSA may be appropriate. However, you’ll want to make sure that you qualify for those programs through conversations with your local FSA office(s).

If you’re ready to begin your journey buying land to build a home or buying land to farm, fill out this form to speak with a loan officer today to discuss your options.

The Farm Credit Foundation for Agricultural Advancement will be awarding at least $100,000 in scholarships to students who are planning to attend or are currently enrolled as full-time students at a college, university, or technical school, pursuing a career in agriculture. The application opened online on September 25, and the deadline for all applications and supporting materials is January 8, 2021.

“This scholarship program is truly life-changing,” says Tony Ill, Chairman of the Farm Credit Foundation for Agricultural Advancement. “The future of the agricultural industry is in our youth, and our scholarship program provides students looking to make an impact on ag with the opportunity to do so.”

The Farm Credit Foundation for Agricultural Advancement’s scholarship program will award at least ten scholarships in 2021, each valued at $10,000. This program is open to high school seniors and students currently enrolled in a two or four year educational program. All applicants must be planning to pursue a career in agriculture, and must reside within Horizon Farm Credit’s five-state territory.

“We encourage any eligible student to apply and share their agricultural story and aspirations with us,” adds Ill. “It’s not limited to those who want to be a farmer. There are many other sides of ag, like being a food nutritionist, soil scientist, veterinarian, or ag educator.”

Applications are being accepted online now through January 8, 2021. For more information, please visit FCFoundationforAg.org or email info@FCFoundationforAg.org. Be sure to follow us on social media with the hashtag #OtherSideOfAg.

We know you want to be a successful equestrian. We also know how much time it can take to find the perfect piece of property to help your dream become a reality. As you begin your search, consider these five questions to ensure you make the right decision for you.

Why do you want to purchase a horse property?

Asking yourself why is a great place to start. Why do you want to own a horse farm? Are you looking to generate income from your equine business? This could mean running a horse breeding and training facility. Or, are you looking to offset the cost of horse ownership by creating a secondary business?

If so, we recommend defining your future income and expenses before you jump into farm ownership. Start by identifying what services you are planning to offer– this could include client horse boarding to fill extra stalls or providing lessons in your indoor arena to provide additional revenue. If you need help fleshing out these details, check out how to create a business plan for your equine operation.

Your future horse property investment could also be encouraged by your personal interest - simply enjoying the beauty of horses and the equestrian lifestyle.

What do you want to do with your business?

We know not all horse farms are alike, and each stable has its own unique identity. It’s common to see a barn specialize in dressage training or reining, just to name a few disciplines. We recommend identifying what type of operation you plan to run.

Once you determine your main focus, think about what (if any) additional services and amenities you are willing to offer. For example, would you offer trailering services to nearby shows, or are you located close to trails for recreational riding? Identifying what you want to do with your business will help in crafting your overall positive client experience.  

Where are you going to be located?

Location means everything in business. Why would a client want to bring their horse to your property? Is the property aesthetically pleasing and easy to access? Have you considered where your clients will be traveling from to do business with you? We know for many horse boarders, travel time can be a defining factor in an already hectic schedule, so being located in an easily accessible location will help you be more appealing for future clients.

Another item to research is the availability of resources in your area. Does the property offer enough space for manure management, pasture turnout, or even expansion? Is there a reliable supply of local feed, hay, and bedding resources? Do you have access to dependable farrier and veterinarian services in the area? Your resource team plays a huge role in building a successful equine operation and it should not be overlooked.

What is your skill level of horse care?

Are you personally planning to provide daily care for your horses or are you paying someone with equine experience to provide that service for your horse property? If you decide to employ staff, have you taken into account the added labor expense on your balance sheet? Do you have enough facility space to grow your onsite horse production services?

If you are planning to provide daily care, having a sound understanding of equine nutrition and overall horse health will be needed. Sourcing high quality hay, grain, and supplements is a daily need of horses. Also, planning to provide additional services such as deworming, hoof care, vaccinations, and dental care will all influence the well-being of your horses and your client’s horses.

What do you need in a financial lender?

We know you want to work with the best equine lending specialist, and we understand what it takes to handle equine loans. All of the above questions may seem overwhelming at first, but that’s why we’re here – to walk you through each question and step. Business or pleasure, large or small, let us help you.

At Farm Credit, we have close ties within the equine industry, offer flexible rates and terms, and, as a cooperative, our members are able to take advantage of our patronage program that allows us to return part of our profits back to our borrowers.