A Refinance Land Loan Can Help You Save

Whether you are a farmer, an outdoor enthusiast, an investor, or someone who bought a piece of land in hopes of building a home there someday, you might be paying more than you need to. For those who have been making monthly payments on a piece of property for some time, there are several options to refinance land loan, but the option you choose will depend on what you hope to achieve with refinance land loan. There are several reasons why landowners may want to refinance their land, but generally speaking, a land owner will refinance their land loan to obtain more favorable loan terms and improve their overall financial situation.

Let’s take a look at what we mean by “refinance land loan,” as well as some of the benefits property owners can enjoy when they refinance.

Benefits of Refinancing a Land Loan

Although refinancing might sound like changing the terms of an existing loan, the refinancing process actually refers to acquiring a new loan to pay off the existing loan. You can benefit from several aspects of refinance land loan if you qualify for a new loan.

Lower Interest Rates

When you refinance land loan through Farmers Bank, you may be able to obtain a new loan that offers lower interest rates than your current loan, which could be true for several reasons. For example, the Federal Reserve plays a big role in determining the interest rates that banks are able to offer their customers, and the Fed tends to change its economic policies frequently as the economy fluctuates. When the Federal Reserve changes its economic policies and lowers interest rates, this will affect the overall price of the dollar for both the government and banks alike.

If you were to refinance your land loan when interest rates are lower, you may be able to get a fixed interest rate and lower the monthly cost of repaying your loan. Additionally, you might be able to refinance for a lower interest rate if your personal finances have improved since you applied for your original land loan. Consumers who have better credit scores typically qualify for lower interest rates since they are considered to be a better investment for banks.

If you have been making your payments on time every month, your credit score has most likely increased since you last applied for financing. If this is true for you, it may be a good idea to reach out to Farmers Bank and find out if you qualify for a more favorable loan.

Adjustable vs. Fixed Rates

If your current land loan has a variable interest rate, you may want to consider getting a new loan with a fixed interest rate. Fixed interest rates are generally safer for consumers since they are more predictable than variable interest rates.  Although variable interest rates might be lower at the beginning of the loan’s lifecycle, they can often increase unexpectedly and put a great deal of financial pressure on borrowers. Opting for a fixed interest rate will make it easier to plan your finances in the long run, and it may protect you against sudden economic instabilities.

However, in some cases, it may work in your favor to refinance your land loan for a lower variable interest rate, but this is something you should discuss with your banker or financial planner before going in this direction.

Access to Equity

When you refinance land loan, you may be able to access the equity that you have built up in your land. For this type of refinancing, you can borrow against the value of your land to receive a sum that is greater than what you owe. For example, let’s say you took out a loan for $100k to buy a piece of land, but the land is now worth $120k. As your land has been appreciating in value, you have been making payments and now only owe $60k.

If you have significant equity built up in your land, you could potentially borrow up to around 80% of the land’s total value, which would be around $96k in this scenario. With $96k, you could pay off your existing loan and use the remaining $36k for other purposes, such as home renovations, business ventures, or even buying a new car.

Refinance Land Loan Requirements

Whether or not you will meet the requirements for refinancing your land loan depends on the lender you choose and your personal financial situation. While different lenders will have different requirements, most lenders will consider many of the same factors when determining whether or not a borrower is a good candidate for refinancing their land loan.


As you might expect with any personal loan, your credit score and credit history will be two of the most important factors that financial institutions will take into account when considering you for a loan.


When applying to refinance land loan, you will need to provide proof of your income to demonstrate that you can continue making your monthly payments. Your banker may also ask you for references from your employer to verify the length of your employment.

Land Value

Your bank will also need to determine the total value of your land since it will most likely act as collateral for your new loan. If the land’s value doesn’t cover the cost of the loan, it will not be a good investment for your bank to issue the loan. However, if you have already received a previous loan for the land, it should meet the requirements to act as collateral.

Refinance for Better Terms with Farmers Bank

If you’re ready for lower interest rates and lower monthly payments, Farmers Bank may be able to refinance your land loan and help you save. Farmers Bank has been around for over a century, and we’ve helped thousands of Idaho residents reach their financial goals over the years. Whether you want to refinance a land loan, apply for a home mortgage, or just need an awesome checking account packed with features, Farmers Bank is here for you and your family!

Give us a call or stop by one of our six locations across South Central Idaho!