OCR Text |
Show Authorized Federal Loans for the Farmers The Federal Farm Loan Board has not as yet published their official amortization tables, but the Department of Agriculture in Circular No. 60 has given all the necessary data so . that the farmers can inform themselves completely as to amortization and the rate of pavment for various loans for a given term of years. It will be remembered that the Federal Farm Loan Act prohibits pro-hibits charging interest in excess ex-cess of 6 per cent and it is the general opinion that the rate, instead in-stead of being 6 per cent will be 5 or '44 per cent. It is quite interesting in-teresting to note the small amount that is necessary for a farmer to pay each year. Assuming As-suming that a farmer takes a loan oi $1000.00, the loan to run for forty years, and interest to be paid at the rate of 6 per cent, he will then pay .$66,46 each year. By paying this sum for forty years the entire principal of $1000.00 is liquidated, as well as the interest" charge. In other words, for each $1000.00 that a farmer borrows, if his term is forty years, he pays less than Ti on the investment and by so doing will in forty years clean up the entire indebtedness. If the loan is made at the rate of 5, for each $1000.00 he will only have to pay $58.28 if it is a forty year loan, or less than 6 on the investment. When we remember that the taxes, especially in the West, very often reach &'c on assessed valuations of 50, it can readily be seen, that a forty year loan at 57 is less than the ordinary taxes that a farmer has to pay. In other words, the farmer in the West may, by doubling his taxes, secure a loan equal to 50' of the valuation of his farm and pay it off in forty years. This leads to several interesting conclusions. con-clusions. The first is that a forty year loan from the Federal Feder-al Land Bank will be regarded by everyone as being a tax, and farms will be sold and handled without any material attention being paid to the fact that it is under mortgage to the Federal Farm Loan Board. People will regard these loans and the payment pay-ment thereof in the light of taxes tax-es and it will not hinder in any way the transfer of property. Another point is that farmers wil be able to borrow in excess of their 50 valuation, for investors in-vestors will be glad to take a second mortgage, and, should they have to foreclose, assume thd first mortgage to the Federal Fed-eral Farm Loan Bank. Again, where a man may have a mortgage mort-gage on his place in excess of 50 per cent of the 'valuation as appraised by the Federal Farm Loan Board, he will be able to liqudate a large portion of this and his creditor will be glad to take a second mortgage for the balance, thus allowing the farmer farm-er who is mortgaged to over 50 per cent of his valuation to reduce re-duce the amount that he has to pay and get a lower rate of interest in-terest than is ordinarilly charged by lenders on farm property. |