The banks / equity in land line of credit

[Choice2U]

Ok...I started with an ambiguous sentence. The reverse mortgage has been around for a few years, not the house. lol

[wilagro]

And BANKSTERS have been around for even longer.

[Burbert]

Who needs more loans now, grain prices is
sooooooo, good, sell the stuff, don't
hoard it. Then run ta the banksters wit
yer cheque and squirrel it away fer a
rainy one.

[Daylate]

BMO will value your commodities at 75%. That's the
safest way of getting a line of credit. Sorry local
credit union, if you valued my inventory I would be a
customer.

[LEP]

First Equity Lines of Credit are very flexible and useful
to a good manager who makes good decisions. I have
several of these with low or zero balances. Over the
years I have used them to bridge capital purchase
downpayment and commodity sales timing, short term
equipment purchases, and land purchases.

Responsible credit use starts with the farm operator
understanding how additional debt affects their balance
sheet, cash flow, debt service requirements, etc. If you
don't know what is a reasonable debt level for your
farm, get educated.

Don't leave it to a banker to say what is or isn't a good
level of debt.

I was a banker for ten years and was often frustrated by
customers who would be loaded up with machinery co.
debt and new vehicle debt who thought that if they were
approved that they must have been creditworthy. Banks
were guilty of that as well.

These customers were a little shocked when I told them
the only requirement for equipment co. debt is a
downpayment and a pulse.

[ALLFARMER]

Thanks LEP

I think your comments are very accurate.

[Mufferaw]

As mentioned earlier credit responsibility is key. My Brother refinanced his house 5 years ago with the same strategy - next thing he had a new 5th wheel, 2 snowmobiles, boat and new furniture. Then 2 years ago re-financed his mortgage again for $80,000 more than the original purchase price of the house. His house would have increased ~$120,000 in the same time.

This strategy works great if you save more than you spend which wouldn't apply to 80% of people using this strategy.

[vvalk]

Not sure why people on here have a problem
with debt. I would turn it around and ask why
you would use cash. 25% down and pay 3%
interest. Its called leverage. But land for
$1000 an acre. Put $250 down and its worth
$2000 an acre now. That's 400% return. How
about equipment. We are seeing 6 to 15%
inflation on new equip year to year. Makes
sense to buy some now rather then later if
you plan to farm into the future

[cottonpicken]

Talking with fcc about lines of credit,he said about
150 an acre is about what a guy needs.

Nearly fell off my chair.

[hobbyfrmr]

Vwalk, you have a point. It is fair to say I am not
very progressive.