Property prices in the city of New York are some of the highest in the world. This means that property owners in the city can get huge sums of money if they chose to procure a hard money loan. This is an asset-based type of financing that is designed for borrowers who own residential or commercial properties. When looking for hard money lenders New York City residents should know that there are many reputable lenders in the market.
A distressed property owner in need of cash, will approach the lending company to try to broker a deal in order to secure a loan. Since it is offered as a short term option, the borrower will be required to repay the sum of money in a specified period of time. This financing option has some advantages over the normal bank loans.
A property owner experiencing some difficulties with finances has an opportunity to be offered this kind of loan. Such an individual may have existing debts to settle or facing foreclosure by a creditor due to default in mortgage payment. Bankruptcy can also compel a borrower to turn to hard cash loans in order to pay outstanding debts.
Most people have wrong ideas about this type of financing as they tend to know it being the same as bridge financing. This is not the case since bridge financing is only used by borrowers who are free from any financial problems unlike hard money lending. However, this two options have a similarity in that very high interests rates are imposed.
Usually, potential borrowers would have their property valued after which they can get figures between 0.65 and 0.75 of the current market value. It is a low percentage loan to value ratio but considering a borrowers state and lending risks involved, options become narrow. Borrowers however lose in this deal but there are higher chances that they will repay the loan.
A big concern with this kind of credit service features very high interest rate. This is caused by the expected consequences of lending huge amounts to an individual who already has financial issues. Lenders also charge higher interest rates in order to compensate themselves since they are giving out loans for some period of time.
This kind of loan service is not strictly regulated, hence prone to mischief and frauds. To safeguard against losses, there is need for strong and highly thought decisions from both the borrower and the financier. In essence, conducting a research is very much ideal before dealing with a certain lender and the Internet can provide a lot of useful information about them.
Every service provider have stipulated terms and condition of service. Therefore, it is recommended that any borrower reads and understand them clearly. This is very important since it helps in making right decisions of this nature. Any deal involving huge amount of loans from these lenders, will need a professional consultant like an attorney or a financial adviser in order to take care of any suspicious activities and procure the loan in a proper manner.
You can visit www.commercialmortgageyes.com for more helpful information about Hard Money Lenders New York City.