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 NEGATIVE
PLEDGE
FINANCING
Finance
Up to 80% of Your
New York Co op Now!
Offered
by a Select Group of Lenders,
Negative Pledge Financing is Unique to NYC Marketplace
If
you're thinking of purchasing a co-op in New York City, you
probably know that co-ops are allowed to restrict how much
financing you can obtain. Many buildings allow only 50%, some
allow even less and some allow none. With "Negative Pledge
financing", those restrictions aren't written in stone!
Negative
pledge financing is offered by a select group of lenders that
understand the New York City marketplace. They don't advertise
their services but we know who they are. Negative pledge financing
allows you, the borrower, to finance up to 80% of the purchase
price of a co-op, regardless of co-op guidelines and restrictions.
What's
the general process?
You
apply for the amount of loan that you need, telling the lender how
much financing your co-op allows. When the bank approves your
loan, it sends you, the borrower, two commitment letters-0ne for
the recognized amount and the second with the same terms and
conditions but no recognition agreement (which is why it's called
the "unrecognized" portion). The apartment serves as
security for both portions.
The
bank will fund the Negative Pledge loan to you prior to the
closing of the recognized loan. This allows the funds to be used
for the purchase of the apartment and makes it deductible debt. In
fact, the IRS recognizes co-ops and Negative Pledge financing as
deductible debt as long as you can show clear proof that the funds
were used for acquisition of the apartment.
Rates
for Negative Pledge financing are competitive with other co-op
loans-both fixed and variable. Some have interest-only options
that make your payments 100% tax-deductible!
Some
lenders have minimum post-closing liquidity requirements-others
require a minimum net worth and strong income levels. Generally,
if you appear financially strong enough to obtain board approval
in the co-op building where you are purchasing, then you're likely
to get approved for Negative Pledge financing.
Need
more detail? Please call us and we'll help you determine whether
Negative Pledge financing is the best option for you.
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