The Top 5 Mortgage Mistakes to Avoid
Buying a home can be an exciting and rewarding experience, but it can also be a daunting and overwhelming process, especially for first-time homebuyers.
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Mortgages are a significant financial commitment, and making mistakes during the process can have serious consequences. In this blog post, we'll explore the top 5 mortgage mistakes to avoid.
1. Failing to Check and Improve Your
Credit Score
Your credit score plays a significant role in determining your eligibility for a mortgage and the interest rate you'll receive. Many first-time homebuyers make the mistake of failing to check their credit score or not taking steps to improve it before applying for a mortgage.
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To avoid this mistake, check your credit score and take steps to improve it if necessary. This may include paying off outstanding debts, making on-time payments, and disputing any errors on your credit report. A higher credit score can lead to a lower interest rate and a more favorable mortgage offer.
2. Ignoring
Closing Costs
Another common mistake is ignoring closing costs. Many first-time homebuyers are unaware of the various fees associated with closing a mortgage, such as attorney fees, title search fees, and appraisal fees. These costs can add up quickly and significantly impact the total cost of the mortgage.
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To avoid this mistake, research the average closing costs in your area and budget accordingly. Be sure to factor in these costs when considering the overall cost of the home.
2. Ignoring Closing Costs
Another common mistake is ignoring closing costs. Many first-time homebuyers are unaware of the various fees associated with closing a mortgage, such as attorney fees, title search fees, and appraisal fees. These costs can add up quickly and significantly impact the total cost of the mortgage.
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To avoid this mistake, research the average closing costs in your area and budget accordingly. Be sure to factor in these costs when considering the overall cost of the home.
3. Not Getting Pre-Approved
Getting pre-approved for a mortgage is an essential step in the home buying process. Pre-approval gives you a clear idea of how much you can afford to spend on a home and helps you avoid the disappointment of falling in love with a home you can't afford.
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To avoid this mistake, get pre-approved for a mortgage before you start shopping for a home. This will help you narrow down your search to homes that are within your budget and prevent you from wasting time on homes that are out of reach.
4. Taking on Too Much Debt
Taking on too much debt before or during the mortgage process can have serious consequences. Lenders look at your debt-to-income ratio when determining your eligibility for a mortgage. If you have too much debt, you may not qualify for a mortgage or may be offered a higher interest rate.
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To avoid this mistake, avoid taking on new debt before or during the mortgage process. This includes opening new credit cards, taking out a car loan, or making large purchases on existing credit cards.
4. Taking on Too
Much Debt
Taking on too much debt before or during the mortgage process can have serious consequences. Lenders look at your debt-to-income ratio when determining your eligibility for a mortgage. If you have too much debt, you may not qualify for a mortgage or may be offered a higher interest rate.
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To avoid this mistake, avoid taking on new debt before or during the mortgage process. This includes opening new credit cards, taking out a car loan, or making large purchases on existing credit cards.
5. Choosing the Wrong Mortgage
Choosing the wrong mortgage can be a costly mistake. There are various types of mortgages available, and each has its pros and cons. Choosing the wrong mortgage can lead to higher interest rates, higher monthly payments, and a more significant financial burden in the long run.
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To avoid this mistake, research the different types of mortgages available and choose the one that best fits your financial situation and goals. Don't be afraid to ask your lender questions and seek advice from a financial advisor.
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🏡 Can You Use a DSCR Loan for a Short-Term Rental? Here’s What to Know! 🔍
🏡 Can You Use a DSCR Loan for a Short-Term Rental? Here’s What to Know! 🔍
💰 DSCR Loans for Airbnb & Short-Term Rentals: What Lenders Really Think 🏠
Can You Use a DSCR Loan for a Short-Term Rental? Here’s What You Need to Know
If you’re an investor who loves the cash flow potential of Airbnb or short-term rentals, you might be wondering: Can I use a DSCR loan to finance one?
The short answer — yes, but there’s a catch.
✅ What is a DSCR Loan?
A Debt Service Coverage Ratio (DSCR) loan is designed for real estate investors who want to qualify based on property cash flow — not personal income. Lenders look at the ratio between the property’s net operating income (NOI) and the loan’s debt payments.
It’s a perfect fit for long-term rental investors because the income stream is predictable. But short-term rentals? That’s where it gets tricky.
⚠️ Can You Use DSCR Loans for Short-Term Rentals?
Yes, you can — but only certain lenders allow it.
Most DSCR lenders prefer 12-month leases or long-term tenants, which provide consistent income data for underwriting. Short-term rentals, on the other hand, can have seasonal dips, variable occupancy, and volatile nightly rates — all of which make lenders more cautious.
If you already have a proven track record with short-term rental income or can show consistent Airbnb or VRBO revenue statements, your chances improve significantly.
💡 Why Some Lenders Avoid Short-Term Rentals
Lenders like stability. When they underwrite DSCR loans, they’re assessing how reliably a property can cover its mortgage payments.
A short-term rental — even one that performs well — carries more uncertainty because:
·Income can fluctuate based on tourism trends or local regulations.
·Platforms like Airbnb and VRBO can change policies.
·It’s harder to project annual income without long-term leases.
As a result, the lender pool is smaller. But that doesn’t mean it’s impossible.
🧭 How to Improve Your Approval Odds
If you want to use a DSCR loan for a short-term rental:
1.Show income proof: Use Airbnb, VRBO, or property management income reports to document performance.
2.Work with a flexible broker: Partner with an advisor who has access to multiple lenders — not just one or two.
3.Consider hybrid rental models: Some lenders prefer mid-term leases (3–6 months) for corporate housing or traveling nurses, which can strike a balance between cash flow and predictability.
4.Have strong reserves: Extra liquidity reassures lenders in case of off-seasons or vacancies.
🏁 Final Thoughts
A DSCR loan can fund your next short-term rental — you’ll just need the right lender and documentation to make it happen.
If you’re an investor exploring Airbnb, VRBO, or short-term rentals, Medallion Funds can connect you to lenders who understand your goals and get creative with underwriting.
👉 Let’s turn your rental income into scalable wealth — one property at a time.
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© 2023-2024 Bill Rapp, Medallion Funds LLC, Director of Capital Advisory
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Copyright ©2021 | Mortgage Viking Team
Licensed to Do Business | NMLS # 228246
This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Copyright © 2021 | Medallion Funds
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Corporate Address : 2651 N. Green Valley Pkwy STE. 101 Henderson, NV 89014
Corporate NMLS NMLS # 1825831 | Company Website: https://medallionfunds.com/bill-rapp/
Copyright ©2021 | Mortgage Viking Team Licensed to Do Business | NMLS # 228246
This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply
Corporate | NMLS ID NMLS # 1825831
Corporate Address : 2651 N. Green Valley Pkwy STE. 101 Henderson, NV 89014 https://medallionfunds.com/bill-rapp/