by Sharon Piccioni, Horizon Farm Credit Loan Officer

Ready to establish your own roots, but don’t know where to start? We know that the home buying process can be overwhelming, so we’ve put together this helpful guide to help you prepare to buy a home and set the stage for what the process looks like when you work with Farm Credit. We know that coming up with a down payment can be difficult and is often the reason it takes buyers so long to start the process. Farm Credit is helping first-time rural property owners by offering financing for up to 85% of the purchase price or appraised value with no mortgage insurance*. Contact our team of experts to learn more about this special opportunity and get connected with a loan officer!

How to Prepare to Buy a Home

You have heard this your whole life, but it really is one of the most important things: start saving as soon and as much as you can! When you have a good amount of money saved, it presents more options for you and will allow you to have enough for the down payment and closing costs. 

Another number to be conscious of is your credit score. You can build credit in a variety of ways, one of which is to open a credit card with a low spending limit and a low amount of permitted hard credit pulls. By paying it off every month, you will steadily increase your credit score. 

When looking into loan products, research various banks and lenders and call around to see what they offer. First time home buyers can often take advantage of specialized loans, so it’s best to familiarize yourself with these options. 

Another piece of advice as you embark on your home buying journey - decide what type of property you are looking to purchase. Whether you are looking for a large acreage property with a small house, a smaller lot with a bigger house, or looking for a lot to build on in the future, the loan options for each situation can be a bit different so it is helpful to have an idea on the property you are looking for when looking at options. Learn about the differences between a land mortgage and a home mortgage here.

The Process of Home Buying

We know this can be a daunting idea, but let us break the home buying process down into a few key steps:

Step 1 

Get prequalified! There is nothing worse than finding the home of your dreams and then learning that it won’t fit your budget. Knowing how much you can afford from the beginning will help you focus on the right properties and make the process a lot easier. Most lenders will do this step for free for you to get started. 

Step 2 

Connect with a lender you trust to learn about the options that fit your scenario. There are a ton of loan products such as SMM (secondary mortgage market), in-house fixed rates, adjustable rates, and all of them have pros and cons. It is essential to work with your lender to make sure you select the product that best suits you.

Step 3

Explore the housing options available. There are real estate platforms such as Redfin or Zillow to search for homes or land in your ideal location, or you can work with a local realtor to find a property for you. Sometimes the best opportunities are ones not yet on the market, so consider trying to find properties through word of mouth by talking to neighbors, friends, or family members.

Step 4

Once you’ve narrowed in on the property you would like to move forward with, reach out to your lender to start the loan process. You will want to prepare for the closing and other costs that come with buying a property. Many of these fees will not vary much from lender to lender such as transfer tax, title insurance, and recording fees, however, loan origination fees can be quite different. We recommend discussing these at the beginning of the process, as well as the other fees to consider, like Private Mortgage Insurance, which is needed if you do not have 20% down payment. 

Additionally, there are real estate taxes and homeowners’ insurance, which you will need to know if they will be included in your loan or a separate expense out of pocket. One last thing to remember is your appraisal which is often required when purchasing real estate. This fee can vary depending on the type of appraisal and who will be completing it.

Working with Farm Credit

We know there are plenty of options when searching for a lender to help you purchase your first home, but Farm Credit offers a number of loan products designed to fit your needs. From prequalification to closing, we strive to make your home buying experience as stress free as possible. 

Farm Credit also offers the ability to complete a note modification when interest rates fluctuate. A note modification costs much less than a full refinance, reduces your interest rate, and is done for a flat rate, via email from the comfort of your home. A member of our lending team can give you all of the details on note modifications when discussing our loan options.

We know that this is a transformative time of your life and while it is exciting, you want to be prepared for any road bumps through the process. Contact us today to get connected with your local lending expert and get started on your home buying dream! 

*Certain restrictions apply. This offer is subject to credit approval.

by Joe Waddell, Horizon Farm Credit’s Director of Market Innovation

This blog is part two in an ag technology spotlight. Click here to read the first blog.

In the world of ag tech innovation, we can get caught up chasing the new shiny object and often overlook solutions that are proven in the marketplace. Efficiency gains that can be made by implementing current technology solutions lift the entire industry and make a significant difference in economic viability and sustainability.

At the same time, it’s vitally important we continue investing in startups and developing novel solutions for the future advancement of the industry. However, we need to make sure those developments have applicable use cases.

As mentioned in my earlier blog, communication among all stakeholders is key to finding solutions for future success. Sharing knowledge and ideas within the agriculture community fosters healthy collaboration around innovative solutions. There is still a time and place for competition — which ultimately drives innovation — but communication is vital to addressing challenges with solutions that work for farmers and producers.

So, how do we achieve this? Through building a robust support system, understanding the marketplace, and creating a sandbox for ag tech innovators to play in, among other things.

Build a Robust Support System

Using high-tech equipment provides wonderful upsides when it’s properly functioning, but it is incredibly frustrating when it’s down and you’re left without a viable support network. A robust support platform is another key to adoption and long-term success. 

Entering this space is no easy feat and it’s incredibly important to understand the landscape and on-the-ground issues that can present themselves. Farmers often rely on neighbors’ experiences with tech and best management practices to help drive decision-making. If you put a bad taste in someone’s mouth because of poor technology support, it doesn’t take long to make the community’s discussion board. Even if you have the best product on the market, if you offer poor support to customers, you will lack adoption.

Understand the Marketplace

While seemingly obvious, little time is often spent understanding the problem and those facing the challenges. Within the startup space, it’s not surprising to find numerous novel solutions looking for a problem to solve — the classic case of the hammer in search of a nail. This is where collaboration comes into play. 

There are lessons to be learned from the major ag players who develop products with lifecycles meant for the ag environment, which is no easy task, but an incredibly important one to creating a robust end product. The tried-and-true companies in the ag space have refined their processes over decades to develop products that have a place in the market. By investing time researching the problem being solved — like using in-field trials throughout the entire product lifecycle — solutions are tailored to a diverse set of operating environments.

When developing solutions, engaging larger groups of end-users falls toward the end of the pipeline, making it nearly impossible to successfully pivot when problems present themselves in the field. But what if we had a national database of potential pilot farms willing and able to test solutions to allow entrepreneurs to ground truth in their ideas?

This could include farmers and producers, or as far back as cooperatives that serve large swaths of agriculture communities with diverse testing grounds within their footprints. AgLaunch — a non-profit connecting entrepreneurs with growers — is an example of an accelerator working to implement this type of model.

Play in an Ag Tech Innovation Sandbox

I am encouraged by the growth of regionalized centers — like Grand Farm in North Dakota — that are fostering innovation and competitive collaboration. Centers like Grand Farm promote testing across a multitude of technologies and cropping environments and invite multiple stakeholders to the table. Major industry players, startups, and most importantly, the local ag community implement use cases on the ground to understand real life implementation in their area.

Creating a sandbox for ag tech innovators and end-users alike can also be used as an educational tool to get a new generation engrained back into rural communities. The agriculture community is eager to add enthusiastic folks to the ranks, and a key to success in this area is to have multiple regions showcasing different solutions across a multitude of locations, highlighting the viability of products. This will go a long way toward generating excitement around efficiencies and advancements in the industry.

To get true adoption and foster growth within the industry, we must strive to create a complementary agricultural innovation ecosystem and refrain from a one-size-fits-all system. 

Is your community making strides in this space? I’d love to hear about it! Please send me an email at jwaddell@horizonfc.com to connect. 

by Meagan Walters, Horizon Farm Credit Loan Officer

Ready to start building your dream home, but overwhelmed on where to start? Farm Credit is here to help! Our lending team are the experts in construction loans, and are ready to help you build your dreams. 

The construction process can be extremely lengthy, from perc tests to final inspections, and we want you to feel supported at every step along the way. Read below to learn more about construction planning, the process, and pitfalls to avoid while on your journey

Got Land? Get Financing.

Once you’ve landed your ideal piece of land for your future build, how do you get started on your construction project? Throughout the entire process, you will need to work closely with both your lender and a builder. We recommend starting with your lender to ensure there is a good loan option for the type of home you want to build. Connect with a trusted lender up front to determine a pre-qualification amount so you can budget accordingly for your project. Your lender can put together some initial numbers to give you a better idea of how much you can afford, if there is usable equity in the property, and how much you may need up front for down payment, closing costs, and cost overruns.

Partner with a Builder You Trust

After a conversation with your lender, it’s time to seek out a reputable builder. Start by asking them for their portfolio or references from previous customers. Ideally, you will want to meet with your builder in person to discuss your project in detail. Make sure they communicate well with you and can answer any questions you have. Your builder can help with decisions on the type of home to build, the placement of the home on the property, utilities that will be needed, required tests and permits, and overall cost of the project.

Once you’ve selected your builder, consider the contract, scope of work, and timeline for both the builder and your lender. Some builders offer turnkey contracts that cover every aspect of the build, while other contracts may leave you responsible for things like foundation/excavation, septic, or the well. Contracts that do not address all aspects of construction can create issues down the line and add additional costs to the project. It’s important to understand your contractor’s timeline and project pipeline to ensure your build can be completed in a timely manner that aligns with the lender’s requirements and your expectations.

After ensuring your builder can meet your timeline, your lender is going to need a signed builder’s contract, proposed disbursement schedule, plans, and specifications of the home, as well as any estimates for work outside of the main contract. You will need to work with your builder on these items before applying for the construction loan. Your lender can provide the needed application and list of required financial documents, as well. We recommend applying for the loan at least 60 days prior to when all parties want to start construction.

We know that building is a big step and an exciting process for you and your future. We are here to help you every step of the way and be a resource for you. Click the link below to get in contact with your local loan officer and get started on your prequalification today! 

Contact A Lender

by Joel Alsdorf, Crop Insurance Agent

“As days lengthen, the cold strengthens,” my grandfather often said, contrasting it with his other favorite saying, "make hay while the sun shines." As farmers, we use this time to manage crucial details, from maintenance and repairs to pre-ordering seeds and chemicals, all setting the stage for the year ahead. Amidst these decisions, reviewing your crop insurance program's value is essential. Though overwhelming at times, your policy should provide peace of mind, allowing you to focus on field work during sunny days. 

Your relationship with your crop insurance agent should ensure confidence in your decisions. Your Farm Credit agent uses their expert training to help you understand available options, often expressed through quotes. Quotes may seem complex, however they simply compile numerical values for easy comparison. Your agent will tailor a quote to fit your operation, considering factors like risk management, profitability, and budget. 

Developing a strong relationship with your agent is key. Let's unpack the basics of quote analysis and define what information is included in your crop insurance quote: 

• Plan type: Abbreviations like RP (Revenue Protection) or YP (Yield Protection)
• Unit Structure: BU (basic unit), EU (enterprise unit), OU (optional unit)
• Coverage Level: Typically 50-85% indicating deductible percentage
• Acres: Total or easily calculable number
• Average Yield: Your own or county average
• Total Coverage: Dollar value guaranteed per acre
• Total Subsidy: Government-subsidized amount per acre
• Producer Premium: Cost per acre after subsidy
• Fees: Premium and processing fees

Crop insurance quotes can feel overwhelming, but your agent can help. Understanding your operational goals ensures quotes meet your needs. Reach out to your agent as you plan for the year ahead. 

When you’re ready to review your policy, or learn more about how crop insurance can benefit you and your business, give us a call to speak with a member of our crop insurance team today at 888.339.3334 or click here to learn more.

by Joe Waddell, Horizon Farm Credit’s Director of Market Innovation

After spending more than a year wading through the ag tech scene and orienting myself to the advancements in that space, I find myself reflecting on the value and usability of new and emerging ag tech innovations. I often wonder what farmers have to gain from these proposed solutions, and if we’re truly addressing and understanding the daily challenges farmers face at the ground level.

Within the agriculture industry, there is no cookie-cutter approach to solving shared complex issues across the same segment, let alone multiple segments. While outside viewpoints often bring fresh perspectives to potential solutions, there seems to be a key element missing in much of the early discussions around creating said solutions — involvement from those in the trenches, our farmers.

Communication and Innovation

Like many issues that pop up in our daily lives, there is usually a common theme that either causes or helps solve the problem at hand — communication, or lack thereof. Too little communication brings about innovations that either don’t address the issue at hand or are too costly to implement. 

We must then ask ourselves how we change the culture of communication within the ag innovation space to foster a more robust pathway to success. No matter how well-intentioned, solutions that require a heavy upfront investment and long road to tangibly see payoff often face a much lower success rate.

There’s something to be said for a direct investment approach in current ag tech solutions at the farmgate. Could we stretch dollars to have an immediate impact on farm level sustainability? And, how do we get a better grasp directly addressing solutions on-farm? A solid communication pathway between those developing ag technology and end-users is vital to bringing about solutions that are viable in the marketplace and sustainable long-term.

The Role of Perspective in Decision-Making

Choosing a solution that makes the most sense for an operation typically revolves around personal perspective. For example, sustainability holds a different meaning for each person, and deciding which solution is most sustainable for an operation is subjective. From examining what can be done to impact the bottom line to make a business viable in the future, to exploring approaches that incrementally lead to greater efficiency, developing a one-size-fits-all solution is nearly impossible. 

Beyond that, farming budgets are often on a razors edge of profitability. When thinking about the return on investment, solutions don’t always need to provide a strict monetary outcome — although, those do see the highest adoption rates. Often, the decision to adopt different practices or technologies is impacted by time gained because of efficiency, which allows an indirect monetary gain. Time is money, as they say.

What works for one operation may not work for another, and that’s the beauty of innovation. Whether old technology or new, many factors influence producers’ decisions, with perspective playing a major role in the adoption — or lack thereof — of innovations.

The Farmer’s Voice

When the experiences, challenges, and feedback of farmers is sought out during the innovation process, those solutions often see the highest rate of adoption. Success hinges on gathering the perspectives of farmers to ensure new innovations and technologies truly address root problems, while also keeping cost efficiency in mind. It’s vital ag tech innovators work hand-in-hand with farmers to develop solutions that work for farmers and enhance the success and profitability of their operations.

Interested in keeping up-to-date with the latest trends in ag? Reach out to me at jwaddell@horizonfc.com to talk shop.

This blog is part one in a two-part ag technology spotlight. Check back next week for part two.

Mechanicsburg, PA — Horizon Farm Credit invites new and beginning farmers to apply for the JumpStart program, which provides grant funding to help new farmers establish and grow their operations.

The JumpStart grant program awards $10,000 to top applicants in the start-up phase of business and is part of the larger, comprehensive Grow Ahead program, which provides additional resources and support for those just starting out in agriculture.  This year, up to 15 JumpStart grants will be awarded.

Eligible applicants must be at least 18 years of age or older as of April 19, 2024, must have two years or less of farming experience — or be planning to begin farming within the next two years — and must reside in Horizon Farm Credit’s territory. Current Farm Credit customers and non-customers are eligible to apply.

Those meeting program requirements are encouraged to apply at horizonfc.com/jumpstart. Applications will be accepted March 1, 2024, through April 19, 2024, and there is no cost to apply.

“Supporting those seeking to make their mark in agriculture is vital to the growth and prosperity of the industry as whole,” said Tom Truitt, Horizon Farm Credit Chief Executive Officer. “Farm Credit is thrilled to help new and beginning farmers achieve their dreams by providing financial support, and the JumpStart program reinforces the Association’s commitment to delivering support for the next generation of farmers and producers.”

More information about the JumpStart grant program can be found at horizonfc.com/jumpstart, and questions can be directed to learning@horizonfc.com. To learn more about the comprehensive support Farm Credit provides to young and beginning farmers, visit horizonfc.com/growahead.

About Horizon Farm Credit 
Horizon Farm Credit is a member-owned agricultural lending cooperative, providing consistent and reliable financing and related services to full- and part-time farmers, agricultural-related businesses, and rural landowners. The Association serves 100 counties across Delaware, Pennsylvania, and parts of Maryland, Virginia, and West Virginia. The Association has more than 22,100 members and over $6.5 billion in loans outstanding. Learn more at horizonfc.com.

Once you've decided that you're ready to build your dream home, you may be wondering what to do next. Should you start looking for land, housing inspiration on Pinterest, or talking to a lender? There are many questions and resources that can be confusing, so we are here to help!

Below, you will find helpful information on how to prepare for a building project, how to research contractors/builders, construction loans with Farm Credit, and what the loan closing process entails.

Bonus: Scroll to the bottom for a free educational resource and a chance to connect with one of our lenders!

Where do I Start?

Congratulations - you're ready to build! If you don't already own land to build on, we can discuss financing the land with the construction at the same time. For this to happen, you will have to have the construction contract and blueprints ready to go up front. Or you can look into the options offered when buying land now and building later.

If you're thinking about buying land or building on land you own or have financed, reach out to our loan officers today. We can run numbers and give you an idea of what you could potentially prequalify for based on your current financial situation. This allows you to have more flexibility when working with builders to make decisions such as they type of home and finishes you would be able to afford.

Once you bought the land, you'll want to get to know potential builders to determine who you're most comfortable with. We recommend researching local companies and looking at their previous work. Start with a quick internet search or 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. If you're struggling with locating a builder, our team of experts can recommend someone in your local area.

We do require a licensed contractor to serve as your general contractor through the whole process, and highly recommend finding current or past projects the builder has worked on so that you can see their work firsthand and determine if it fits your needs and wants. We try our best to prepare our customers looking to build, and sometimes they are unaware of how long the process can take. We recommend working with a trusted builder to ensure you have an open and honest conversation about what you are looking to build and what expectations to have.

The cost of construction has also increased over the last few years so it may be more expensive than you are expecting. Working with a builder from the beginning helps you construct a budget, set expectations, and then discuss your options with lenders.

What to Research: Builder and Contractor Edition

Once you've identified the builder you plan to work with, it's best to be as prepared as possible for the first meeting, including developing a list of things you would like to discuss. Below are a few examples:

• What type of home are you looking to build? Stick built, modular, timber, etc.?
• Does the contract include everything for a "turnkey" construction contract or will parts of it need to be subcontracted out? Driveway, landscaping, etc.?
• Does the contract price include permits and impact fees?
• What kind of warranties do they offer?
• Do they have any referrals or testimonies that they can offer?

Doing your research ahead of time will ensure that you are working with a reliable and reputable builder. As a reminder, we do require a licensed contractor to work as your general contractor. We do not allow self-building.

Construction Loans with Farm Credit

At Farm Credit, portfolio loans are financed at 80% of the appraised value. Be sure to have a detailed contract with your builder before working with lenders because the appraiser will depend on these details to give an accurate value of the property.

Farm Credit will finance up to 80% of the overall appraised value of the property "as if" the house is already built. We are able to use any existing equity from the property to go towards the down payment. It is a good idea to have an estimate or proposal written up for the construction project. Farm Credit requires 10% of the cost of construction available for cost overruns. This can be held in cash or savings, stock or investments, gift from family or it can potentially be financed. If overages do not occur, no cash has to be spent. We do have both credit and debt to income ratio standards.

We use a program called BUILT that is interactive for the borrower, lender, and builder. It allows the general contractor to login and order inspections for draws. A draw is a payment made by the lender to the contractor for completed work. The entire process is managed through this online portal, enabling inspections to be ordered and completed faster, and allowing draws to be issued sooner. This helps ensure your build continues without delays.

Closing on a Farm Credit Construction Loan

When building on large acreage, we can account for the true value of the full acreage. Not all lenders value every acre. Land is our specialty, so we can count the value of every acre (larger acreage means more value). This will give you more equity in the property and can potentially reduce the amount of cash you need to put in for construction. Additionally, we can roll existing land loans into the construction loan for one loan on a 30-year term. We require interest only payments on funds disbursed during the 12-month construction period, which then rolls into a fully fixed mortgage with fixed payments. Use our loan calculators to calculate your payment here.

Another advantage of working with Farm Credit is that buyers will only pay closing costs when the loan initially closes, meaning there are no closing costs when the loan switches to permanent financing. This feature, referred to as a note modification, is done entirely through DocuSign, with no need for an attorney or office visit if you consent to receive your documents electronically. Farm Credit offers note modifications in place of refinances for rate purposes, lowering interest rates when they come down for a flat fee. These do not require a new title or appraisal, and no additional closing costs outside of the fee. In short, note modifications can save you time and money in the long run, when rates shift in your favor! These can be done an unlimited number of times over the life of the loan and will be advised upon by your Farm Credit lender.

As you can see, there is a lengthy process when it comes to preparing to build and we want to be there for you every step of the way. Get connected with a lender today to see how we can help you get into your dream home!