12 BULLETIN 968, U. S. DEPAETMENT OF AGRICULTURE. 



• As one would expect, those finding it necessary to borrow on 

 second-mortgage security obtained a larger average per cent of the 

 purchase price on first mortgage than did those who did not em- 

 ploy second mortgages. 



The 477 buyers giving no second mortgage gave first mortgages to 

 the Federal land banks that averaged 41 per cent of the cost of the 

 farms purchased. The remainder of the purchase price was paid in 

 cash or by trading other property. The 531 buyers giving a second 

 mortgage additional to the first held by the Federal land banks, 

 which averaged 43.3 per cent of thte cost of farms purchased, obtained 

 34.1 per cent of the cost of the farm on the second mortgage. The 

 ■amount put in by this group in cash or trade averaged 24,4 per cent 

 of the cost of the farm. 



INFLUENCE OF PERSONAL RELATIONSHIPS ON THE TERMS OF SECOND 



MORTGAGES. 



The better terms on which farms are bought by men who are able to 

 get relatives to accept second mortgages, whether buying from such 

 relatives or from others, are reflected bj' the averages for the group of 

 43 buyers who bought, giving second mortgages to their relatives. The 

 second mortgage held by relatives of the buyer averaged 39.7 per cent 

 of the cost of the farm and bore interest at the average rate of only 

 5.8 per ceiit per annum, little more than the totah annual cost of the 

 first mortgage. The amount put in by this group in cash or trade 

 amounted to only 17.3 per cent of the cost of the average farm. These 

 men bought farms averaging $12,807 in value, this amount averaging 

 higher than the farms in any other group. That the price paid was 

 reasonable in most cases is indicated by the fact that 43.9 per cent of 

 the purchase price was accepted as mortgage by the Federal land 

 banks. 



When sellers of land, even when not related to the buyers, accept 

 a second mortgage in part payment, they are frequently willing to 

 give favorable terms of credit because they are anxious to effect a 

 sale. This tendency is reflected in the terms of second mortgages 

 given to former owners (Tables V and VI). It appears that in this 

 group the second mortgages averaged 37.4 per cent of the purchase 

 prices of the farms. This is slightly less- than the percentage for 

 mortgages given to relatives who were sellers, but much higher than 

 the proportion of the purchase price (22.8 per cent) represented by 

 mortgages given to persons who were not sellers. The tendency 

 toward favorable terms in mortgages held by sellers of farm land 

 who are not related to the buyers is shown by the average interest 

 rate of 6.6 per cent, as compared with an average of 7.2 per cent on 

 mortgages held by persons other than sellers. 



