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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šµ Texas Construction Costs Are Surging ā Hereās What Builders Need to Know š§
šµ Texas Construction Costs Are Surging ā Hereās What Builders Need to Know š§
š Texas Builders Face Rising Construction Costs: Financing Strategies That Still Work š°
šµ What Rising Construction Costs Mean for Texas Builders
Construction costs across Texas are climbingāfast. From labor shortages to supply chain constraints, builders are feeling pressure on every line of the budget. Whether you're developing subdivisions, building custom homes, or taking on commercial projects, higher costs impact timelines, margins, loan qualification, and borrowing strategy.
As a mortgage broker with access to hundreds of construction, bridge, and permanent financing options, I see the downstream effects of these cost increases every day. The good news? Builders who understand how lenders underwrite rising costs can still thrive in this environment. Hereās how.
š Why Construction Costs Are Rising in Texas
Texas is still one of the fastest-growing states in the country. That demand brings opportunityāand increased pressure on materials, labor, and land pricing.
Main drivers include:
Ā·Material cost volatility (lumber, steel, concrete)
Ā·Skilled labor shortages
Ā·Higher land acquisition prices
Ā·Insurance and regulatory increases
Ā·Supply chain bottlenecks
Ā·Higher interest rates affecting project carrying costs
Most builders now face 10ā25% higher all-in costs vs. just a few years ago.
š° How Higher Costs Impact Builder Financing
1. Loan Qualification Gets Tighter
Lenders scrutinize:
Ā·Updated budgets
Ā·Cost escalation cushions
Ā·Contingency reserves
Ā·Builder experience
Ā·Borrower liquidity
Expect lenders to request stronger PFS/SREO documentation and higher liquidity buffers.
2. Appraisals Need Realistic Cost Projections
With construction costs fluctuating, appraisers rely heavily on:
Ā·Verified material bids
Ā·General contractor cost books
Ā·Current market comparables
Inaccurate budgets can kill the deal faster than anything.
3. DSCR and Feasibility Matter More
For investment products (BTR, multifamily, spec builds), lenders are laser-focused on:
Ā·Stabilized rents
Ā·Operating expense ratios
Ā·Local vacancy rates
Ā·Cap rate trends
When costs rise, profit compression becomes the real risk.
4. Builders Must Use Better Loan Structures
Hereās whatās working for Texas builders right now:
ā One-Time Close Construction Loans
Reduces rate risk, simplifies the process for owner-occupied builds.
ā Construction-to-Perm Loans
Ideal for long-term rentals and BTR communities.
ā Bridge Loans
Useful for covering cost overruns or delaying permanent financing until stabilization.
ā Land + Vertical Build Packages
Combining both phases helps lock in better terms.
ā Interest-Only Options
Lower monthly expenses during construction.
At Medallion Funds, we structure custom financing so builders retain margins even as costs rise.
š¦ What Builders Should Do to Protect Margins in 2025
š¹ Update Budgets Every 30 Days
Prices shift quicklyādonāt rely on bids older than 60 days.
š¹ Add 10ā20% Contingency
Lenders are expecting it. Investors appreciate it.
š¹ Lock in Material Contracts Early
Pricing stability can save margins.
š¹ Work With a Mortgage Broker Who Specializes in Construction Lending
A banker gives you one option.
A broker gives you hundreds.
š Final Takeaway
Rising construction costs arenāt slowing Texas demandābut they are forcing builders to be smarter with budgeting, execution, and financing. With the right loan strategy, Texas builders can still scale, win projects, and stay profitableāno matter what the market throws their way.
If youāre a Texas builder needing construction financing, cost-overrun solutions, or better loan termsāMedallion Funds can help.
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Ā© 2023-2024 Bill Rapp, Medallion Funds LLC, Director of Capital Advisory
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Refinancing youe loan and when to do it
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Copyright Ā©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 Ā© 2021 | Medallion Funds
Corporate | NMLS ID NMLS # 1825831
Corporate Address : 2651 N. Green Valley Pkwy STE. 101 Henderson, NV 89014
Corporate NMLS NMLS # 1825831 | Company Website: https://medallionfunds.com/bill-rapp/
Copyright Ā©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/