By wisely choosing the type of interest plan and repayment schedule for your loan, you can maximize the use of the money while minimizing your interest costs. Farm Credit has several rate plans available to suit your particular situation and unlimited options for loan terms. Fixed rate plans, variable rate plans and adjustable rate plans are three of the most popular.
With all of these plans, you have the ability to change interest rate products as your interest rate needs change. Our experts are here to help sort out rates and terms that fit your lifestyle. Contact us today and let us work for you.
The interest rate on these loans will be fixed for the entire term of the note. This term can be as short as five days and as long as 30 years on Country Home mortgages.
Rates on variable loans are tied to changes in the financial market. Your interest rate is calculated by adding a specific number of percentage points to an index.
There are two indexes available; Prime Rate and LIBOR. Prime Rate is the rate most often published in the news and is the base rate quoted by commercial banks as the rate charged their most creditworthy customers. LIBOR is the London Inter-Bank Offered Rate and is a widely monitored international cost-of-funds measures. The LIBOR index is more responsive to changes in financial market activity than the Prime Rate.
Agricultural variable rate loans generally will not have an annual or lifetime cap on interest rate changes. Consumer-type loans secured by a dwelling are available with interest rate caps. Variable loans are not subject to prepayment penalties.
Adjustable Rate Mortgages (ARMs) allow you to gain some interest rate protection by fixing the rate for a specified term. ARMs are offered with one-year, three-year, and five-year repricing options. The interest rate for ARMs is indexed to the weekly yield on U.S. Treasury Securities, adjusted to a constant maturity equal to the ARM terms. For example, a one-year ARM would be indexed to a constant maturity of one-year Treasury securities.
The interest rate on a loan will equal the rate of the index plus a specified number of percentage points. The interest rate is subject to change at the end of the repricing period. A one-year ARM is repriced every 12 months, a three-year ARM every 36 months, and a five-year ARM every 60 months.
ARMs may contain caps or ceilings associated with interest rate changes. There may be an annual cap and a lifetime cap. Caps are designed to give a borrower protection against increases in interest rates. There are no prepayment penalties on an ARM loan.
Leasing is a useful financing alternative that can maximize your cash flow and possibly reduce your taxes in certain situations. Leases are especially useful for equipment. Ask your loan officer to run a lease-loan comparison to see if leasing may be an option for you.
Contact us and a loan officer will be glad to review all of the options available to you.