Real Estate Word of the Day: Usury
Usury refers to the act of charging interest on a loan at a rate that exceeds the legal limit set by law. Historically, usury laws were established to protect borrowers from exorbitant interest rates and to ensure fair lending practices. These laws vary by jurisdiction, but their core purpose remains the same: to prevent lenders from exploiting borrowers through excessive interest charges.
Mortgage lenders must adhere to state and federal usury laws when setting interest rates. If a lender charges an interest rate above the legal limit, it can be considered usurious, leading to legal consequences and financial penalties. For borrowers, usurious rates can make mortgage payments unaffordable, potentially leading to foreclosure and financial distress. Private loans and hard money lenders often cater to real estate investors looking for quick financing solutions. While these lenders can provide valuable services, they must still comply with usury laws. Investors should be cautious and ensure that the interest rates offered do not exceed legal limits. Failing to do so can result in legal disputes and financial losses. In some real estate transactions, sellers may offer financing to buyers, effectively acting as the lender. While this can be a flexible option for both parties, sellers must also adhere to usury laws. Charging excessively high interest rates can lead to legal challenges and complicate the transaction process.
Looking to buy or sell your home on Staten Island? For all your real estate needs, look no further than Tom Crimmins Realty! Give us a call at (718) 370-3200, and we can provide you with professionally-trained agents who are flexible to all that you’re looking for!
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