Hard Money Lenders in Massachusetts: What You Need to Know
2 min read
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.
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.
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 provides short-term loans secured by real estate. Unlike traditional lenders who focus on the borrower’s creditworthiness, hard money lenders prioritize the property’s value. They cater to real estate investors, such as house flippers and those purchasing rental properties, who need quick access to funds and flexible terms.
Hard money lenders determine loan amounts based on the after-repair value (ARV) — 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 6 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:
