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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💼 Stop Leasing, Start Owning: How SBA 7(a) & 504 Loans Are Powering Owner-User CRE

🏢 Why SBA 7(a) & 504 Loans Are Quietly Dominating Owner-User Commercial Real Estate

Bill Rapp, Commercial Mortgage Broker
January 06, 2026•3 min read

🏢 Why SBA 7(a) & 504 Loans Are Quietly Dominating Owner-User Commercial Real Estate

💼 Stop Leasing, Start Owning: How SBA 7(a) & 504 Loans Are Powering Owner-User CRE

Why SBA 7(a) & 504 Programs Are Quietly Dominating Owner-User Commercial Real Estate

Most business owners still believe owning their building requires massive down payments, short loan terms, and balance-sheet strain. That assumption is outdated.

Across Texas and nationwide, SBA 7(a) and SBA 504 loans are quietly becoming the most powerful tools for owner-user commercial real estate (CRE) acquisitions—especially for medical practices, professional services, light industrial users, and growing local businesses.

When explained clearly, these programs consistently outperform conventional bank financing.

What Is Owner-User Commercial Real Estate?

Owner-user CRE applies when a business occupies 51% or more of the property it purchases. This includes:

  • Medical and dental offices

  • Law firms and CPA practices

  • Warehouses and light industrial buildings

  • Retail and mixed-use properties with an operating business

Instead of paying rent indefinitely, owners convert occupancy costs into equity.

SBA 7(a) vs. SBA 504: The Core Difference

SBA 7(a) Loans

  • Up to 90% financing (as low as 10% down)

  • Flexible use: purchase, refinance, build-out, and business acquisition

  • Variable or fixed-rate options

  • Ideal for smaller properties or complex transactions

SBA 504 Loans

  • Typically 10% down for owner-users

  • Long-term fixed rates on the SBA portion

  • Designed for real estate and heavy equipment

  • Excellent for stability-focused operators

Both programs offer 25-year amortizations, dramatically reducing monthly payments compared to conventional CRE loans.

Why These Programs Are Dominating Right Now

1. Low Down Payments Preserve Liquidity
Business owners can retain working capital for hiring, marketing, or expansion instead of tying up cash in real estate.

2. Fixed-Rate Certainty Beats Leasing Risk
While leases reset every 3–5 years, SBA 504 borrowers lock in long-term stability—often below market rents over time.

3. Inflation Turns Debt Into an Asset
Fixed debt payments decline in real terms as rents and property values rise.

4. Tax Efficiency
Interest deductions, depreciation, and cost segregation strategies make ownership structurally superior for many operators.

5. CPAs and Attorneys Are Driving Adoption
Sophisticated advisors increasingly guide clients toward SBA ownership structures rather than perpetual leasing.

Buying vs. Leasing: The Quiet Math Shift

In many markets, SBA loan payments now approximate—or even undercut—Class B lease rates. The difference is ownership creates:

  • Equity accumulation

  • Rent control

  • Exit flexibility (sale-leaseback, refinance, expansion)

Leasing builds someone else’s balance sheet. SBA ownership builds yours.

Common Myths That Keep Owners Renting

  • “SBA loans take too long” → Properly packaged deals close efficiently

  • “My business won’t qualify” → Cash-flow strength matters more than size

  • “Conventional loans are cheaper” → Not after adjusting for amortization and equity

Why a Mortgage Broker Matters

SBA lending is not retail banking. Structure, lender selection, and packaging determine success.

A broker who understands SBA credit, CDC coordination, and owner-user underwriting ensures:

  • Faster approvals

  • Cleaner closings

  • Optimal leverage

Final Thought

SBA 7(a) and 504 loans are not niche products. They are quietly reshaping how smart business owners acquire commercial real estate.

If you operate your business from a leased space, the real risk may be not exploring SBA ownership.

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Š 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 Š 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 Š2021 | 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/