Before we delve into the topic at hand it would be prudent to first of all try to clarify what a hard money loan is all about. Talk of hard money today is very common, but what exactly is hard money? Technically, hard money loan is a form of loan that is offered by lenders to borrowers based on a property’s value; this is away from the traditional lenders. The loans are offered through less bureaucratic processes.
Hard money lenders in NYC like others in other parts of the nation do not rely on the borrower’s creditworthiness to award a loan. The value of the property is the main thing that lenders in NYC look at plus the borrowers skin in the deal. The lenders want to make sure that in case the borrower defaults on his obligation then there will be enough equity on the property over and above the value of the loan. This means that hard money lenders in NYC will not give a borrower up to 65 percent or more loan to value.
Those who qualify to get hard money loans in NYC include real estate investors who have bought a new home and are yet to sell an existing one. Such individuals qualify for a bridge loan. People with bad credit with a good level of equity in a home and wish to avoid foreclosure can also get hard money loans although foreclosure bailouts are not available for homeowners these days.
Because these loans are more expensive in many instances they are used by borrowers as a last resort in NYC. Borrowers who are unable to get loans from banks or mortgage brokers may be forced to negotiate with hard money lenders. The lenders of hard money in NYC are often individuals who lend their own money.
Although there are many wonderful hard money lenders in NYC, unfortunately like in any other industry or profession we also have bad ones, loan to own lenders, posing as hard money lenders that make a loan to you knowing you have no way to pay them back in full.