Hard Money Lenders in Massachusetts: What You Need to Know
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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 exploring ways to fund your next real estate venture in Massachusetts? Whether you’re looking to flip a Cape Cod-style house in Danvers or invest in a rental property in Worcester, hard money lenders in Massachusetts offer the flexibility and speed to meet your needs. These alternative financing solutions are perfect for those who need quick funding, have limited initial capital, or face credit challenges.
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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.
This article will walk you through the essentials of hard money lending in Massachusetts, helping you determine if this financial tool suits your real estate goals. From understanding how hard money loans work to exploring their uses and costs, we’ll cover everything you need to make an informed decision. Plus, we’ll introduce some alternatives and explain how HomeLight’s Buy Before You Sell program can help you leverage your home’s equity.
What is a hard money lender?
A hard money lender is a private individual or institution that offers hard money loans, which are named after the “hard” assets used as collateral, typically real estate. Instead of relying heavily on a borrower’s credit or income, these loans are approved based on the property’s value. These firms usually accommodate real estate investors like house flippers and rental property buyers.
To determine loan amounts, hard money lenders consider the after-repair value (ARV) or the estimated value of the property after renovations. They typically lend a percentage of the ARV to ensure profitability and security.
Interest rates for hard money loans are higher, ranging from 8% to 15% or more, with repayment periods of six to 24 months. Costs include origination fees, closing costs, and points. If a borrower fails to repay, the lender can seize the property to recover their investment.
How does a hard money loan work?
If you’re a real estate investor in Massachusetts looking for fast and flexible financing, working with hard money lenders could be a smart move. Here’s a breakdown of how hard money loans work:
- Short-term loan: These loans typically have a repayment period of six to 24 months, much shorter than the 15- or 30-year terms of conventional mortgages. Some lenders might offer extensions of up to 36 months if needed.
- Faster funding: Hard money loans can be approved within days, a significant advantage compared to the 40 to 50 days typical for mortgage loans, allowing you to close deals quickly.
- Less focus on creditworthiness: Approval depends less on your credit score or income history and more on the property’s value, making it easier for those with less-than-perfect credit to secure funding.
- Greater scrutiny on the collateral: Hard money loans are based on the loan-to-value ratio of the property, using the property as collateral to secure the loan.
- Non-traditional lenders: These loans are provided by individual investors or private lending companies rather than traditional banks, offering more personalized and flexible terms.
- Traditional loan denial: Hard money loans are often sought by those with poor credit who have been denied a mortgage but possess significant home equity.
- Higher interest rates: Due to the higher risk involved, these loans come with higher interest rates than traditional mortgages, reflecting the increased cost of borrowing.
- Larger down payments: Borrowers may need to fork over a larger down payment, sometimes up to 20% to 30%, depending on the property’s value and loan specifics.
- More flexibility: With fewer government regulations, hard money lenders can set flexible credit scores and debt-to-income criteria, and these loans can help avoid foreclosure.
- Interest-only payments: Unlike traditional mortgages, hard money loans may allow for interest-only or deferred payments initially, offering more flexibility in managing cash flow.
What are hard money loans used for?
Hard money loans cater to specific financing needs in Massachusetts. They are often sought after by investors needing quick funding or those who face challenges with traditional bank loans. Let’s take a look at some common uses for hard money loans:
Flipping a house: For Massachusetts investors focused on flipping homes, hard money loans provide quick access to cash for purchasing and renovating properties. These loans allow flippers to compete in fast-paced markets, complete renovations, and resell properties for profit in a short period of time.
Buying an investment rental property: Investors looking to acquire rental properties can use hard money loans to secure properties quickly, especially those in need of repairs. These loans allow landlords to make necessary improvements and start generating rental income faster than traditional bank loans.
Purchasing commercial real estate: Hard money loans are great for commercial real estate deals because they offer flexibility and quick closings. They’re perfect when timing is critical, helping investors secure valuable properties without long approval waits.
Looking for alternatives to traditional loans: Individuals with significant home equity but poor credit or other disqualifying factors often partner with money lenders. These loans prioritize the asset’s worth over the borrower’s credit score, providing a viable financing option for those who might be turned down by traditional lenders.
Facing foreclosure: Homeowners nearing foreclosure can use hard money loans to refinance their debts or buy time to sell their property. This can be a temporary solution to avoid losing their home or having a foreclosure mark on their credit report.
How much do hard money loans cost?
The cost of hard money loans is generally higher than traditional loans due to the increased risk and quick, flexible funding they offer. Here are some typical 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, increasing the initial cost of obtaining a loan.
You can use online hard money loan calculators to estimate these costs accurately.
Alternatives to working with hard money lenders
Not a real estate investor? Homeowners looking to leverage their current home’s equity may want to consider the following options:
Take out a second mortgage: With substantial equity in your home, a home equity loan or home equity line of credit (HELOC) can provide necessary funds at a lower interest rate compared to hard money loans.
Cash-out refinance your home: This option lets you refinance your existing property, pulling out cash to finance new investments. It is often offered at lower interest rates than hard money loans.
Borrow from family or friends: Personal loans from family or friends can offer flexible repayment terms and potentially lower or no interest rates, making them a more affordable option.
Use a government-backed loan program: Programs like those from the FHA, VA, or USDA can assist in purchasing homes with lower down payments and reduced interest rates.
Consider peer-to-peer loans: These loans are provided by individual investors through lending platforms and function similarly to hard money loans but often with different terms.
Explore specialized loan programs: If you already have a hard money loan and want to replace it, consider specialized loans for fixer-uppers or investment property refinancing.
Request a seller financing option: In certain cases, sellers may agree to finance the purchase themselves, resulting in lower closing costs and less stringent eligibility requirements.
How to buy before you sell
Sometimes, the perfect listing comes along when you least expect it. Perhaps it’s a charming colonial home in Newburyport or an industrial-style loft in East Boston. If you’re a Massachusetts homeowner who wants to buy a new home before selling your current one, HomeLight offers an innovative solution to simplify the process.
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. If your home qualifies, you can get your equity unlock amount approved within 24 hours, with no cost or commitment required. This enables you to confidently purchase your next home and then sell your current one vacant, avoiding the hassle of moving twice.
Here’s how HomeLight Buy Before You Sell works:
While the program has a flat fee based on your current home’s sold price, the potential savings in other areas can outweigh this cost. For instance, you might save on moving expenses, temporary housing, and even negotiate a better purchase price for your new home. Additionally, HomeLight’s BBYS fees are generally much lower than the interest rates on bridge loans, which currently range from 9.5% to 12%.
3 top hard money lenders in Massachusetts
The Massachusetts real estate market moves fast, and having the right lender can make all the difference. Whether you’re flipping a property, funding a renovation, or need to close quickly, hard money loans offer speed and flexibility that traditional banks often can’t. Below, we’ve rounded up three of the top hard money lenders in Massachusetts to help you find the right fit for your next deal.
TMD Capital
TMD Capital is a direct private lender specializing in financing non-owner-occupied residential and commercial properties. Established in 2019, the firm operates in 46 states, including Massachusetts, providing a diverse array of loan programs such as fix-and-flip, long-term rental, multi-family, new construction, and bridge financing.
With a focus on efficiency and investor needs, TMD Capital can close loans in as little as seven days. Their comprehensive approach combines speed, flexibility, and market expertise to support a wide range of real estate investment strategies.
Lending clientele: Residential and commercial real estate investors
Loan criteria: Varies by loan program
TMD Capital has earned a 4.7-star rating on Google, with several clients praising the team for delivering strong value through competitive pricing and reliable service. Reviewers highlight a smooth loan process and appreciate that the staff executes exactly what is promised.
Many note the friendly, easy-to-work-with approach that makes transactions straightforward. Overall, clients recommend TMD Capital for dependable financing and a hassle-free experience.
Website: tmd-capital.com
Phone number: 800-571-7405
New Silver
New Silver, founded in 2018, helps real estate investors get fast, flexible funding while supporting local communities. Their data-driven platform, FlipScout, gives investors the insights they need to make smarter decisions.
Loans can go up to $15 million, and funding is typically available within five days, covering a wide range of projects. With a focus on speed and simplicity, New Silver makes it easier for investors to move quickly and get deals done.
Lending clientele: Residential real estate investors
Loan criteria: Up to 75% ARV
New Silver scored 4 out of 5 stars on Google from over 30 reviews. Clients’ experiences with this company appear to be mixed. Some reviewers praise the team for efficiency, innovative products, and a focus on client success, noting that they return for multiple deals and feel supported throughout the process.
Others, however, report frustrations with slow communication, repeated requests for documentation, and difficulty reaching the team. Overall, while some clients find the company reliable and forward-thinking, others caution that inconsistent service and responsiveness can create challenges.
Website: newsilver.com
Phone number: 855-844-5626
Raymond C. Green Companies
Raymond C. Green Companies, based in Boston, provides short-term financing to real estate and construction professionals across New England. As a regional direct lender with over 50 years of experience, the firm offers loan amounts ranging from $100,000 to $10 million, with maturities of up to two years.
Borrowers can request pre-approval letters, and closings are typically completed within three to seven business days. Payment structures are flexible, including interest-only options or payments built into the loan.
Lending clientele: Builders, developers, and real estate investors
Loan criteria: Up to 75% LTV
The Raymond C. Green Companies boasts a 4.9-star rating on Google from nearly 50 reviews. Clients praise their exceptional customer service, deep knowledge of the construction industry, and responsiveness to inquiries.
Many highlight the team’s reliability and integrity, noting that they felt confident and supported throughout the process. Others describe working with the company as smooth and positive, and highly recommend them for anyone seeking reliable real estate financing.
Website: raygreen.com
Phone number: 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 Massachusetts?
Deciding whether a hard money loan is right for you depends on your unique situation and real estate investment goals. This type of financing is best suited for Massachusetts real estate investors who need fast, flexible funding for projects requiring quick turnaround or when traditional financing isn’t an option. If you can manage higher costs and shorter repayment terms, a hard money loan might be the right choice for your next investment.
For homeowners looking to leverage their equity without the high interest rates of hard money loans, HomeLight’s Buy Before You Sell program could be a better alternative. This program allows you to pay a small flat fee while benefiting from a more competitive offer and a smoother moving process.
As with any significant financial decision, it’s important to consider your long-term strategy and consult with a financial advisor. For those ready to connect with investor-friendly real estate professionals in Massachusetts who have access to trusted hard money lenders, let HomeLight introduce you to top agents in your area.
Header Image Source: (todd kent/ Pixabay)
Editor’s note: This post is for educational purposes only and should not be considered financial advice. HomeLight encourages you to consult your own advisor.
At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.