Do it however you feel comfortable doing it just make sure you know what you are getting in to. I bought land, paid 15-20% down (can't remember) paid it off in a year by busting my you know what to make big payments every month. No one but you knows your situation but they are not making any more land I can promise you that! It is the best investment there is as long as you can afford it!

I've used First South Farm Credit, but will never again. They won't let you cut timber without using the money to pay towards the principal. The next 2 times, i used Farmers Merchants bank. 20% down and would go 15 years, if they didn't know you, 20 years if they did. The banking practices changed in 08, so i'm not sure what they do now.

I'm sure each loan is different, but I've used First South Farm Credit and cut timber with no problem whatsoever.

I'm not going to, but had thought about it about 2 years ago. Then my wife quit her job so that I couldn't afford the land anyway, so now it is a mute point.

Did they know you cut the timber?

That's what I was thinking too. How the heck would they even know? I doubt Debbie the bank secretary is doing timber cruises on the weekends!

Yes. I discussed cutting the timber at closing. They knew all about it.

Debbie doesn't but Denson does. I know him personally.

All i know is, at the Oxford office, i discussed cutting the timber on my 40 acre parcel and using the money to buy another 40, and they told me, that the timber was part of the value of the land and that any money recieved would need to go towards the principal. I refinanced thru Farmers & Merchants bank and they told me, it was my timber, i could do what i wanted with it. I would ask, or get it in writing from First South Farm Credit, before i finaced my land with them.

The way I look at it is really simple, the mortgage is on the land not the timber. The timber is a crop just like cotton, beans or corn. I would never work with a lender that wanted to tie a mortgage to the timber. The land should be appraised for the value of the dirt, any improvements (buildings, ponds, etc) and the value of recreation that the land provides. Timber should never be part of the equation. What if a tornado comes through and destroys 75% of your timber? Are you suppose to come up with the cash to pay for it? That's ridiculous. You did the right thing by finding another lender.

When we look at a tract of land the timber is one of the first things we look at. Access, soil, internal roads, location, contiguous owners and everything else is considered. I have seen unscrupulous people contract/buy a tract of land with good timber with little or no down payment, then sell the timber and let the land go back to the whoever financed the land.

Yeah, but your mortgaged amount will have the timber factored in, and will likely be well over the amount of the dirt. I agree though, that doesn't make much sense because a tornado is a very real possibility.

The timber may be factored in, but it is not actually mortgaged. At least not in any of the farms I have bought. I guess it all depends on the lender and the risk.

I agree that the timber is certainly a variable in determining the value of a piece of property. But to actually have it mortgaged as part of the purchase is a totally different matter. The lender's job is to underwrite the risk appropriately and avoid making loans to people who will hang them out to dry. If they are forcing timber continences on people who are actually quality risks, those people should be looking for another lender.

I guess Im not understanding what the fuss is about.

I can certainly understand the lender's point of view.

Example
100k property w/ 50k of timber value.

20% down = 20k
Loan = 80k

You clear cut it & don't apply the proceeds to the principal.
Property's market value is 50k.

Bank is upside down on their collateral.
You are 30k in the black if you walk away.

Your scenario describes one of the risks of lending. It's part of the deal and their responsibility to underwrite risks appropriately. The "fuss" for me is that I do not want a lender to tell me what I can or can not do with my property because someone "might" clearcut a property and walk. Yes, I could cut the timber and reduce the overall value, but a tornado could do the exact same thing. Are these lenders requiring crop insurance on the timber? I doubt it.

Look, everybody is certainly free to choose who they do business with. I prefer to do business with lenders that do not put any requirements on my timber. Why anyone would choose a lender that does is beyond me.

It's not "your" property until it's paid off....

It's never paid for. Miss that tax payment and see. You never quit paying...unless you are a senior living on the property. But if they will tax a nursing home bed, this is short lived also.

I disagree. The bank has no rights to my property unless I fail to pay. They can't hunt it, they can't access it and they sure as hell can't tell me what to do with my timber. So as long as I pay on time like I am suppose to, the land is mine and I'll cut the timber if I want to.

Unless some of you work for the banks, I really don't know why we are arguing about this. If you want them to control your timber, fine by me. I'll keep working with the banks that don't.

I used Southern Ag Credit. Very easy to deal with.