These ag finance buzzwords can add clarity when exploring the ins and outs of ag loans and the loan application process.

Interested in pursuing an agricultural land loan? As the nation’s premier agricultural lender, AgAmerica helps the country’s ranchers and farmers succeed in financing their agribusinesses. We aim to strengthen their operations with our custom loan packages featuring low interest rates, long amortizations, and an outstanding 10-year line of credit. Below is a list of common financial buzzwords and their definitions. Better understanding them will help you navigate the loan application process.

Ag Finance Buzzwords

Ag Finance1. Fixed Rate Mortgage: A mortgage on which the interest rate and monthly mortgage payment remain unchanged throughout the term of the mortgage.


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2. Adjustable Rate Mortgage (ARM): A mortgage on which the interest rate, after an initial period, can be adjusted to current rate levels.


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3. Two Pack Mortgage: A combination of a first mortgage and a second. Typically, this consists of a term loan followed by a line of credit.


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4. Blended Rate: A weighted average of interest rates on all debt.



5. Float: AlloAg Financewing the rate to vary with changes in market conditions.



6. Rate Index: An index that serves as a benchmark used to calculate the interest rate charged on mortgages. Example: a rate index based off of the London Interbank Offered Rate, or LIBOR, a worldwide benchmark rating system.

7.Ag Finance Amortization: Paying off a debt with a fixed repayment schedule in regular payments.



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8. LTV: Loan-to-value, a comparison of the value of the loan to the value of the collateral.



Ag Finance9. Cash-Out Refinance: A mortgage refinance that allows borrowers to receive an amount of cash greater than what is required to repay the first mortgage and to refinance other associated loans. Closing costs are included in the cash-out calculation.

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10. Verification of Deposit (VOD): A document signed by the borrower’s financial institution verifying the balances of the borrower’s financial accounts.



Ag FinanceVerification of Mortgage (VOM): A document of your mortgage payment history, used to verify your existing balance and monthly payments, and to check for any late payments on the account.


To review even more financial terms, please visit our glossary page.