Closing Costs | What You Should Know
Closing costs are an important item to think about when purchasing or refinancing your farm. Often times loan fees and closing costs can be overlooked when completing a transaction. Ag Lending Group offers a wide variety of loan products and offerings which range in closing cost fees. We thought it would be helpful to outline what you should be keeping in mind when working on your farm land loan whether is it a refinance or purchase.
What are closing costs?
Closing costs generally encompass Agricultural Appraisal, Flood Hazard Determination, Title Insurance, Title Opinion, Recording Fees, UCC’s and Lender Fees.
Title Opinion: The title opinion ensures your right to own a property and sell it at a later date. The title opinion will outline the state of ownership, whether there is an easement, encroachments, oil deposits, and mineral rights
Flood Hazard Determination: identifies whether a property is located in a special flood hazard area, if the borrower is required to obtain flood insurance
Title Insurance: Title insurance is a form of indemnity insurance that protects lenders and homebuyers from financial loss sustained from defects in a title to a property. The most common type of title insurance is lender's title insurance, which the borrower purchases to protect the lender.
Agricultural Appraisal: the purpose of a land appraisal it to determine the market value of the property you are purchasing or refinancing. Ag Lending Group works with experienced agricultural appraisers across the United States in every commodity. Once the appraiser is formally engaged
Recording Fees: The term recording fee refers to an expense charged by a government agency for registering or recording the purchase or sale of a piece of real estate. The transaction is recorded so it becomes a matter of public record. Recording fees are generally charged by the county where the transaction takes place since it maintains records of all property purchases and sales. The amount of the recording fee varies from county to county.
UCC’s: UCC-1 Financing Statements are commonly referred to as simply UCC-1 filings. UCC-1 filings are used by lenders to announce their rights to collateral or liens on secured loans and are usually filed by lenders with your state's secretary of state office when a loan is first originated. UCC-1 filings can either be filed for specific assets—such as a commercial property or piece of equipment—or as a blanket lien covering all of the borrower’s assets.
Lender Fees: This includes all origination and servicing fees for the loan. This can range anywhere from .5%-2% of the total loan amount.
What should I expect to pay and how?
Most often we roll all of the closing costs into the loan amount. This means you do not have to pay cash for the closing costs at the time of the loan. Everything this taken care of through escrow. If you do not want to roll the closing costs into the loan amount you can pay for the fee via wire at closing. When developing the use of funds schedule with your Ag Lending Group representative you can discuss the closing cost line item and opt to pay out of pocket or roll it in to the total loan amount.