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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💼 Inside the 1% Playbook: Structuring Real Estate Loans for Maximum Tax Efficiency 📊

📊 How the 1% Structure Real Estate Loans for Tax Efficiency 💰

Bill Rapp, Commercial Mortgage Broker
January 23, 2026•3 min read

📊 How the 1% Structure Real Estate Loans for Tax Efficiency 💰

💼 Inside the 1% Playbook: Structuring Real Estate Loans for Maximum Tax Efficiency 📊

How the 1% Structure Their Real Estate Loans for Tax Efficiency

Most borrowers focus on interest rates.
The top 1% focus on structure.

High-net-worth individuals, seasoned investors, doctors, and business owners understand that the real advantage in real estate comes from how the loan is structured, not just how cheap the rate looks on paper. The right structure can legally reduce taxes, improve cash flow, and accelerate long-term wealth.

As a mortgage broker, this is where strategy matters.

1. Asset-Based Lending Over Income-Based Lending

The 1% prioritize asset performance, not W-2 income.

Instead of traditional underwriting that relies on tax returns, elite borrowers often use:

·DSCR loans

·Bank statement loans

·Commercial cash-flow underwriting

These structures allow:

·Qualification based on property income

·Preservation of tax-efficient write-offs

·Continued use of aggressive depreciation strategies

This is especially powerful for investors and self-employed borrowers who intentionally minimize taxable income.

2. Separating Properties by Entity Structure

Wealthy borrowers rarely hold real estate in their personal name.

They use:

·LLCs

·Series LLCs

·Trust structures (where appropriate)

Why this matters:

·Cleaner accounting

·Enhanced liability protection

·Easier expense allocation

·More flexibility with depreciation and cost segregation

Loan structure and entity structure must align—or tax advantages are lost.

3. Long-Term Fixed Debt to Maximize Depreciation

The 1% favor long-term fixed-rate debt when depreciation is the goal.

Why?

·Predictable payments

·Stable cash flow

·Full utilization of depreciation and interest deductions

This approach is common with:

·DSCR loans

·Portfolio commercial loans

·Select non-QM residential products

Short-term debt may look cheaper—but long-term structure wins on taxes.

4. Strategic Use of Cash-Out Refinances

Rather than selling and triggering capital gains, high-net-worth investors:

·Refinance

·Pull equity tax-free

·Reinvest into new assets

This allows:

·Capital redeployment without taxable events

·Portfolio growth while deferring taxes

·Preservation of stepped-up basis strategies long-term

Loan timing and structure are critical here.

5. Aligning Loan Strategy With the CPA and Advisor Team

The 1% never structure loans in isolation.

They coordinate with:

·CPAs

·Financial advisors

·Estate planners

A strong mortgage broker understands how to:

·Structure debt to complement tax strategy

·Avoid disqualifying deductions

·Support long-term planning goals

This is where a broker beats a bank—flexibility and strategy.

Why Mortgage Structure Matters More Than Rate

Banks sell rates.
The 1% buy structure.

When loans are designed correctly, borrowers gain:

·Lower effective tax burden

·Higher after-tax returns

·Stronger long-term wealth outcomes

This is the difference between qualifying for a loan and engineering a portfolio.

Work With a Mortgage Broker Who Understands Strategy

At Medallion Funds, we specialize in:

·DSCR and asset-based lending

·High-income professional mortgage strategies

·Investor and portfolio loan structuring

·Coordinating financing with tax efficiency in mind

If you want your loans structured like the 1%—not the average borrower—it starts with the right conversation.

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© 2023-2024 Bill Rapp, Medallion Funds LLC, Director of Capital Advisory

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Bill Rapp - Commercial & Residential Mortgage Broker

Whether you're a first-time homebuyer, a seasoned investor, or a business owner with ambitious plans, securing the right financing is crucial. At Medallion Funds, we take the guesswork out of mortgages, offering a comprehensive suite of residential and commercial loan options to fit your unique needs. Looking for Your Dream Home? We understand the excitement and challenges of navigating the residential real estate market. Our experienced mortgage brokers will guide you through every step, from pre-qualification to closing. We offer a variety of loan programs to suit your financial situation, including: • Fixed-rate mortgages: Offering stability with predictable monthly payments. • Adjustable-rate mortgages (ARMs): Providing competitive rates for a set period. • FHA loans: Making homeownership accessible with lower down payments. • VA loans: Rewarding veterans with attractive rates and flexible terms. Investing in Your Business Future? Growth often requires capital, and we can help you unlock the potential of your commercial property. Our brokers specialize in a wide range of commercial loan options, including: • Purchase loans: Financing the acquisition of new buildings or land. • Construction loans: Facilitating the development of your project. • Refinance loans: Restructuring your existing mortgage for better terms. • SBA loans: Providing access to government-backed financing for qualified businesses. The Medallion Funds Difference: We go beyond simply finding a loan. We take the time to understand your goals and develop a personalized strategy. Here's what sets us apart: • Expertise: Our brokers have a deep understanding of both residential and commercial lending. • Competitive Rates: We leverage our strong lender relationships to secure the best possible terms. • Streamlined Process: We handle the paperwork, keeping you informed every step of the way. • Exceptional Service: We're committed to providing you with a positive and stress-free experience. Ready to Take the First Step? Contact Medallion Funds today for a free consultation. Let's discuss your financing needs and help you achieve your dreams!

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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/