One has probably heard about hard money loans wherein people would get funds with a piece of real estate as a collateral. Now hard money lenders new york city would actually make a lot of money because they would charge very high interest rates. Now if one is not familiar with these types of lenders, then here are some things that one should know about them.
Now one would probably ask himself what the difference is between these types of loans and the normal loans with property as a collateral. Well the first difference would be the interest rates of these two loans. The former would have extremely high interest rates while the latter would have the normal interest rates.
Now the hard loans would make use of the real estate of a borrower as a collateral. However, the difference between this and a normal loan with collateral would be that a normal loan would make use of the market value of the real estate. In the event that the borrower cannot pay, the bank will just take his property and use the value to pay the loan.
Now the hard money lenders would use the future value instead of the current. Now the future value would be the value of a real estate when all repairs and modifications have been made to it. Now do take note that there is a risk on the lender because if the borrower cannot pay, then he might have to take a property that is not worth much.
Another difference between hard lenders and normal ones would be the fact that the normal ones would look at the credit rating of the borrower. Unlike the normal ones, the hard ones do not care about the credit rating of the borrower. What the latter one would care about would be the returns.
As stated above, they would first assess the future value of the real estate to get an amount. Now if they would see that the return is rather high, then they will permit the loan. When that is done, the borrower would have to sign a contract wherein the borrower agrees to give the property if he does not pay.
Now if one is a borrower, he would probably ask himself as to why he would want to borrow a loan with such high fees. These types of loans are actually for people who are already desperate for funds and are already at loose ends. If they cannot seem to secure a loan from traditional mediums, then they would have no choice but to go here.
So basically, these are some of the things that one should know about these types of lenders. Now one thing to take note of is that these lenders do not have a standard interest rate or fee. The rates that they would give would actually depend on their own discretion as they are not affiliated with any bank or financial loan company.
Now one would probably ask himself what the difference is between these types of loans and the normal loans with property as a collateral. Well the first difference would be the interest rates of these two loans. The former would have extremely high interest rates while the latter would have the normal interest rates.
Now the hard loans would make use of the real estate of a borrower as a collateral. However, the difference between this and a normal loan with collateral would be that a normal loan would make use of the market value of the real estate. In the event that the borrower cannot pay, the bank will just take his property and use the value to pay the loan.
Now the hard money lenders would use the future value instead of the current. Now the future value would be the value of a real estate when all repairs and modifications have been made to it. Now do take note that there is a risk on the lender because if the borrower cannot pay, then he might have to take a property that is not worth much.
Another difference between hard lenders and normal ones would be the fact that the normal ones would look at the credit rating of the borrower. Unlike the normal ones, the hard ones do not care about the credit rating of the borrower. What the latter one would care about would be the returns.
As stated above, they would first assess the future value of the real estate to get an amount. Now if they would see that the return is rather high, then they will permit the loan. When that is done, the borrower would have to sign a contract wherein the borrower agrees to give the property if he does not pay.
Now if one is a borrower, he would probably ask himself as to why he would want to borrow a loan with such high fees. These types of loans are actually for people who are already desperate for funds and are already at loose ends. If they cannot seem to secure a loan from traditional mediums, then they would have no choice but to go here.
So basically, these are some of the things that one should know about these types of lenders. Now one thing to take note of is that these lenders do not have a standard interest rate or fee. The rates that they would give would actually depend on their own discretion as they are not affiliated with any bank or financial loan company.
About the Author:
When commercial clients are in search of hard money lenders New York City is the place to find them. Start your mortgage application today by visiting this recommended website at http://www.commercialmortgageyes.com.
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