These types of loans have differences between them that are crucial to understand, yet so many people looking for loans start out on the wrong path because they don’t understand that these two types of loan aren’t the same.
A rural loan is made to those who want to purchase property in the rural United States. Rural areas are places in the US that are far away from highly populated towns and cities and the government wants to encourage growth in more rural areas. These loans are typically offered through a government agency like the USDA.
If you decide to go with the USDA for your rural loan, however, be advised that they have strict regulations on what areas qualify as a rural home loans area. The agency has broken down the United States into qualified rural areas where these loans can be used generally the area has to have a population of less than 25,000 and the agency keeps track of this areas population. This is to ensure areas have proper status. You should check at local rural development offices for lists of lenders that offer USDA rural loans.
A Farm Loan is very different type of loan that is designed only for farms and farm equipment. You would get a farm loan most likely through a private lender. Some examples of farm loans are operating loans. Operating loans cover things like crop needs, labor and family living expenses, livestock purchases or other farm-related needs.
There are also equipment loans that cover things such as Grain Bins and facilities, farm and home improvements, farm trucks and vehicles, new buildings of all types, farm improvements (like tiling), livestock facilities and breeding livestock. Farm Loans also cover real estate purchases and do not have the same sorts of restrictions as a rural loan has such as population and location restrictions.
A lender can talk with you further about your specific requirements for a loan, or you can look online for information defining specifics for your situation. You should look online first and play around with a mortgage calculator to get a general idea about what payments will be like for someone with your credit profile and cash for down payment. Also, look around at different interest rates there are many ways to pay back farm loans and rural loans terms and conditions vary greatly on length of time to pay back a loan and the interest a bank will charge you to borrow the money.
If you understand the difference between a rural loan and a farm loan before you seek your options, you will have an easier time getting the financing you need for your new home and/or equipment.
Copyright (c) 2012 Farm Credit Services of Mid-America