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.

In this type of loan, the property owner approaches a private lending company or an individual investor with the view of securing a large sum of cash with the intention of repaying it in a few months or after a couple of years. It is usually offered as a short to medium term financing option. This type of financing has numerous benefits over traditional 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.

There is a common misconception that this type of financing is the same as bridge financing. The truth is that the latter is normally used by property owners who are not in financial distress while the former is specifically meant for individuals who are in financial trouble. Whatever the case, these two financing options have high interest rates.

Normally, prospective borrowers can expect to get anywhere from 0.65 to 0.75 of the current market value of their property. While this may be a low loan to value ratio, lending companies and investors need to lower their risk. Since borrowers have a lot to lose, they are more likely to service the loan.

One of the most notable features of this credit facility is that it comes with a very high interest rate. This is largely due to the fact that the lender is risking a lot by lending to a person who has a poor credit history. Since the loan is also availed within a very short period of time, investors or lending companies must compensate themselves well for the service.

The hard money loan industry is largely unregulated, so borrowers do not have the usual safeguards. It is therefore important for both parties to be careful when making a deal. Ideally, borrowers should do their research before choosing a lender. The internet can be extremely helpful in giving consumers information about lenders in the industry.

When borrowing money, it is important for borrowers to read and understand the terms and conditions being proposed by the lender. Borrowers who understand the terms and conditions that come with a credit facility they are seeking, are more likely to make intelligent and well informed decisions. Since these transactions often involve a lot of money, borrowers may want to talk to their lawyer first and explore other options before considering this one.

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