Hard Money Lenders Boston: Fast Funding Options
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Kelsey Morrison Former HomeLight EditorClose
Kelsey Morrison Former HomeLight EditorKelsey Morrison worked as an editor for HomeLight's Resource Centers. She has seven years of editorial experience in the real estate and lifestyle spaces. She previously worked as a commerce editor for World of Good Brands (eHow.com and Cuteness.com) and as an associate editor for Livabl.com. Kelsey holds a bachelor’s degree in Journalism from Concordia University in Montreal, Quebec, and lives in a small mountain town in Southern California.
Are you thinking about funding your next real estate project in Boston with a hard money loan? Whether you’re planning to renovate a brick townhouse in Dorchester or purchase a rental property in Southie, hard money lenders in Boston offer the speed and flexibility you need. Hard money loans are a viable alternative to conventional loans and are especially convenient for those with tight project timelines, limited initial capital, or less-than-perfect credit.
Even if you’re not an investor but need to bridge the gap between buying and selling a home, we have some alternatives to help you leverage your home’s equity. This article will guide you through the essentials of hard money lending in Boston, helping you determine whether this financial tool fits your real estate investment or home-buying objectives.
Start Making Offers Without Waiting to Sell Your Home
Through our Buy Before You Sell program, HomeLight can help you unlock a portion of your equity upfront to put toward your next home. You can then make a strong offer on your next home with no home sale contingency.
Editor’s note: This post is for educational purposes and is not intended to be construed as financial advice. HomeLight always encourages you to consult your own advisor.
What is a hard money lender?
A hard money lender is a private individual or company that offers short-term loans secured by real estate. Unlike traditional lenders, hard money lenders in Boston focus more on the value of the property being used as collateral rather than the borrower’s credit score and income. Their clients typically include house flippers and those purchasing rental properties, who need quick access to funds and flexible loan terms.
Hard money lenders determine the loan amount based on the after-repair value (ARV) — the estimated value of a property after all renovations and repairs are completed. They typically lend a percentage of the ARV to ensure a profitable investment and minimize risk.
These loans come with higher interest rates, ranging from 8% to 15% or more, and additional costs like origination fees, closing costs, and points. If a borrower fails to repay the loan, the lender can take possession of the property to recover their investment.
How does a hard money loan work?
If you’re a real estate investor in Boston seeking fast and flexible financing, working with hard money lenders could be the solution. Here’s a quick rundown of how hard money loans work in Boston:
- Short-term loan: These loans typically have a repayment period of 6 to 24 months, unlike the 15- or 30-year terms of conventional mortgages. Some lenders might offer extensions of up to 36 months if needed.
- Faster funding option: When a quick deal is essential, hard money loans can be approved within days, compared to the 30 to 50 days usually required for a mortgage loan.
- Less focus on creditworthiness: Approval is less dependent on your credit score or income history and more on the property’s value.
- More focus on property value: These loans require collateral, like a home, and are based on the loan-to-value ratio of the property.
- Not traditional lenders: Hard money loans are typically provided by private investors or lending companies, not traditional banks.
- Loan denial option: They are sometimes used by those with poor credit who have been denied a mortgage but have significant home equity.
- Higher interest rates: Due to higher risk, these loans come with higher interest rates than traditional mortgages.
- Might require larger down payments: Depending on the property’s value and loan terms, borrowers may need to fork over a larger down payment, sometimes up to 20%–30%.
- More flexibility: With fewer regulations, hard money lenders can set flexible credit scores and debt-to-income criteria. These loans can also help homeowners avoid foreclosure.
- Potential for interest-only payments: Unlike traditional mortgages, hard money loans may allow for interest-only or deferred payments at first.
What are hard money loans used for?
Hard money loans serve various financing needs in the Boston real estate market. They are often sought by investors needing quick funding or those who may struggle to qualify for traditional bank loans. Ahead, we’ll explore the common uses for hard money loans:
Flipping a house: For Boston-area house flippers, hard money loans provide quick access to cash for purchasing and renovating properties. These short-term loans enable flippers to acquire properties in competitive markets, make necessary renovations, and resell them for a profit as soon as possible.
Buying an investment rental property: Investors seeking rental properties can use hard money loans to acquire them quickly, especially those in need of immediate repairs. Compared to traditional loans, hard money loans allow landlords to complete renovations and start renting out their units sooner.
Purchasing commercial real estate: Hard money loans are popular in commercial real estate transactions due to their flexibility and quick closing times. They are particularly useful when timing is crucial, making the difference between securing a valuable investment or missing out.
Borrowers who can’t qualify for traditional loans: Individuals with substantial home equity but poor credit or other disqualifying factors sometimes turn to hard money lenders. With these loans, qualification is based more on the asset’s value than the borrower’s credit score.
Homeowners facing foreclosure: Homeowners nearing foreclosure may use hard money loans to refinance their debts or buy time to sell the property. This can provide a temporary solution to avoid losing their home or receiving a foreclosure mark on their credit report.
How much do hard money loans cost?
The cost of hard money loans is typically higher than traditional loans due to the increased risk and convenience of quick funding. Here are some common costs associated with hard money loans:
- Interest rates: These can range from 8% to 15% or higher, based on the lender’s risk assessment.
- Origination fees: Lenders may charge 1% to 5% of the total loan amount as an origination fee.
- Closing costs: Additional fees at closing can include legal fees, appraisal fees, and other administrative costs.
- Points: Lenders might charge points (a percentage of the loan amount) upfront, adding to the initial cost.
You can use online calculators to estimate your hard money loan costs.
Alternatives to working with hard money lenders
If you’re a Boston homeowner looking to leverage your home’s equity, here are some alternatives to hard money loans to consider:
Take out a second mortgage: A home equity loan or HELOC allows you to borrow against your home’s equity, often with lower interest rates compared to hard money loans.
Cash-out refinance: This option lets you refinance your existing mortgage and take out cash, typically at lower rates than hard money loans.
Borrow from family or friends: Loans from family or friends can offer flexible terms and potentially no interest, making it a cost-effective option.
Use a government-backed loan program: Programs from the FHA, VA, or USDA provide low down payments and reduced interest rates for eligible buyers.
Peer-to-peer loans: Peer-to-peer lending platforms connect you with individual investors offering loans, often with terms differing from traditional hard money loans.
Specialized loan programs: Look into loans tailored for fixer-uppers or refinancing investment properties, which can replace an existing hard money loan.
Request a seller financing option: Some sellers may finance the sale themselves, offering lower closing costs and more lenient eligibility requirements.
How to buy before you sell
Sometimes, the perfect listing appears when you’re not even looking. Maybe it’s a single-family home in Allston with a spacious backyard or a two-bedroom condo in East Boston with picturesque harbor views. If you’re a Boston homeowner aiming to buy a new home before selling your current one, HomeLight offers an innovative solution to make the process smoother.
The Buy Before You Sell (BBYS) program allows you to leverage the equity in your current home to make a stronger, non-contingent offer on a new property. With this program, you can get your equity unlock amount approved within 24 hours, with no cost or obligation. This allows you to purchase your next home confidently and then sell your current one vacant, avoiding the inconvenience of moving twice.
Here’s how HomeLight Buy Before You Sell works:
There is a flat fee of 2.4% of your current home’s sold price, but the potential savings in other areas can outweigh this cost. You might save on moving expenses, temporary housing, and even the purchase price of your new home. Additionally, HomeLight’s BBYS fees are generally lower than the interest rates on bridge loans, which currently range from 9.5% to 12%.
3 top hard money lenders in Boston
Traditional lenders might not fit every real estate investment scenario. If you need to act fast and seize an opportunity, consider these top-rated hard money lenders in Boston.
TMD Capital
Based in western Massachusetts, TMD Capital is a direct, private lender that funds the purchase of non-owner occupied residential and commercial properties, and offers bridge loans and real estate-backed lines of credit. The company was founded in 2019 and serves 46 states, including Massachusetts. They tout six different loan programs, including fix-and-flip loans, long-term rental loans, multi-family loans, and new construction loans.
Lending clientele: Residential and commercial real estate investors
Loan criteria: Varies by loan program
TMD Capital has earned a 4.5-star rating on Google. Clients who left positive reviews praised the company’s professionalism, expertise, and reasonable fees and rates. A couple of negative reviews mention clients getting ghosted by their contacts at TMD Capital. “Great experience working with these TMD,” reads a recent review. “These guys are true professionals and give the time, attention, and expertise needed to get deals done.”
800-571-7405
New Silver
New Silver is located in Brookline and funds real estate investment loans in 39 states, including Massachusetts. The company was founded in 2018 and offers fix-and-flip loans, rental property loans, and ground-up loans. They only finance non-owner-occupied properties in urban or suburban areas with 1–50 units. Closing can take five to 10 days, or longer, depending on the area the property is located in.
Lending clientele: Residential real estate investors
Loan criteria: Varies by loan program
New Silver maintains a 3.9-star rating on Google based on over 30 reviews. Clients commend the company for their quick closings, prompt communication, and high loan-to-value ratios. Negative reviews mention misleading information on their website and an unprofessional operator. “New Silver is a top-notch lender for flippers,” reads one review. “They have closed all my deals very fast. My loan officer, James, always responds quickly when a new deal is under contract to get the appraisal ordered right away.”
855-844-5626
Raymond C. Green Companies
Based in Boston, Raymond C. Green Companies provides short-term financing to real estate and construction professionals across New England. They are a direct private lender offering nine different types of loans, ranging in size from $100,000 to $10 million. All loans are written with a maturity of up to two years, and the company is happy to provide pre-approval letters upon request.
Lending clientele: Builders, developers, and real estate investors
Loan criteria: Up to 75% LTV
The Raymond C. Green Companies touts a 5-star rating on Google based on nearly 50 reviews. Clients commend their dedication to customer service, knowledge of the construction industry, and willingness to answer questions. “We have worked with the Raymond Green Companies for a number of years,” wrote a reviewer. “They are professional and personable. They offer quick closings and are always willing to offer suggestions.”
617-947-8070
Investing in real estate?
Hire an investor-friendly real estate agent who can help you get access to off-market properties at a discount and assess potential rental income based on market trends. HomeLight can connect you with investment property specialists at no cost.
Should I partner with a hard money lender in Boston?
Deciding whether a hard money loan is right for you depends on your specific circumstances and real estate investment objectives. Hard money loans are best suited for Boston real estate investors who need quick access to capital for projects with fast turnarounds or when traditional financing just isn’t feasible. If you can handle the higher costs and shorter repayment terms, this type of funding can provide the flexibility needed to take advantage of lucrative opportunities in the Boston real estate market.
For homeowners looking to leverage their equity without the burden of high interest rates, consider HomeLight’s Buy Before You Sell program. This alternative allows you to make a competitive, non-contingent offer on a new home while paying a small flat fee, simplifying your move and potentially saving you money.
As with any major financial decision, it’s important to consider your long-term strategy and consult with a financial advisor to ensure it aligns with your overall investment goals. If you’re looking to connect with investor-friendly real estate agents in Boston who have access to trusted hard money lenders, let HomeLight introduce you to top professionals in your area who meet these criteria.
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