Farming can be a lucrative business prospect but you might need some help starting out. If you are running short on funds to buy land for your form or want to expand it further, it is a good idea to rely on a mortgage loan. However, there are some common mistakes that farmers make in the application process and you must avoid them to get approved. Let’s have a look at the top 5 common mistakes farmers make when applying for a farm mortgage.
1. Not Completely Understanding The Basic Requirements
A common mistake that farmers make is that they do not understand the basic requirements to get approved for the loan. Missing out on any of these requirements can get their application rejected. So, before applying for the farm mortgage loans, it is important that you fulfill all basic criteria including minimum credit score, minimum loan amount ($400,000.00), minimum acreage, location, and income (should be enough for servicing all debts) requirements. Besides, you should have some collateral to secure the loan as well.
2. Not Having The Finances Up-to-Date
When applying for a farm mortgage, or any other loan in general, make sure that you first have up-to-date financial documentation. If you fail to do so, you risk your application getting rejected.
3. Not Getting All The Documents Ready Beforehand
The processing of a mortgage application tends to be a bit complicated. Lenders often request a number of documents before and during the application process. You can easily get frustrated when you’re asked to provide documents, again and again, even those which you might have provided already.
Sometimes, your provided documentation can prompt the requirement for additional documents. Mistakes like providing only the front side copy of a document can also be a reason why lenders ask for those documents again as you had to provide scanned copies from both front and back.
To make sure that your application process goes on swiftly, you must get all the documents ready beforehand and should provide them to the lender whenever requested.
4. Omitting Information On The Farm Mortgage Loans Application
Your application for the farm mortgage is the first step in getting pre-approved and you can’t afford to go wrong here. Omitting important information from the application, or misrepresenting anything intentionally, can sabotage the loan approval.
Failing to disclose alimony or child support payments in the paperwork or not mentioning your deferred loans or an income-driven repayment plan can all get your application rejected. No matter how much you pay towards a debt now, the lenders want to make sure that the new mortgage is still affordable for you when you have to make repayments.
5. Not Carefully Reading All The Terms And Conditions
Signing the dotted line in haste can be a big mistake and should be avoided. When you apply for farm mortgage loans, make sure that you read all the terms and conditions, and completely understand them before you file the application. In fact, you should carefully go through all the terms and ask questions to clarify any concerns you may have. This can go a long way in saving you unnecessary hassle at a later stage.
Avoid these common mistakes and you should be on your way to getting a farm mortgage loan. Non-compliance can make your application go down the drain.