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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💣 Why SBA Loans Fail in Underwriting (And How to Avoid It) 🚫
💣 Why SBA Loans Fail in Underwriting (And How to Avoid It) 🚫
⚠️ SBA Loan Denied? The Real Reasons Deals Fall Apart 💼
Why SBA Deals Fail in Underwriting (And How to Get Approved)
“Most SBA loans don’t fail because of the business…
They fail because of how the deal is structured.”
If you’re a business owner, investor, or real estate borrower trying to secure SBA financing, understanding underwriting is the difference between closing and getting declined.
At Medallion Funds, we see it every day: strong deals that fall apart—not because they’re bad—but because they’re presented incorrectly.
Let’s break down exactly why SBA deals fail in underwriting—and how to position yours to win.
🔍 The SBA Underwriting Reality
SBA lenders don’t think like conventional banks.
They’re focused on three core pillars:
·Cash Flow (Primary)
·Risk Mitigation
·Borrower Strength
If your deal doesn’t clearly check these boxes, underwriting will stall—or worse, decline.
🚨 Top Reasons SBA Deals Fail
1. ❌ Insufficient Cash Flow (DSCR Issues)
The #1 killer of SBA deals is cash flow.
Lenders typically want:
·DSCR ≥ 1.25x
If your business (or property) can’t comfortably cover debt payments:
👉 The deal dies.
Common mistake:
·Overstating revenue
·Underestimating expenses
·Ignoring debt obligations
Fix:
·Normalize financials
·Add back legitimate expenses
·Stress-test projections
2. ❌ Weak or Inconsistent Financials
SBA underwriting is documentation-heavy.
Red flags:
·Declining revenue trends
·Inconsistent tax returns
·Large unexplained deposits
Underwriters think:
“If the story doesn’t match the numbers, it’s a no.”
Fix:
·Clean up financials before applying
·Align P&Ls, tax returns, and bank statements
·Be prepared to explain anomalies
3. ❌ Poor Deal Structure
This is where most borrowers lose.
Examples:
·Too much leverage
·Not enough equity injection
·Improper loan type selection (7(a) vs 504)
Reality:
👉 Structure beats rate. Every time.
Fix:
·Work with a broker who understands SBA structuring
·Choose the right product for your use case
·Align terms with exit strategy
4. ❌ Lack of Borrower Liquidity & Reserves
Even if the deal works on paper, lenders want to know:
👉 “Can this borrower survive a downturn?”
Red flags:
·No post-closing liquidity
·Minimal reserves
·High personal leverage
Fix:
·Maintain liquidity after closing
·Avoid draining all capital into the deal
·Show financial strength outside the business
5. ❌ Industry Risk & Experience Gaps
SBA lenders evaluate:
·Industry volatility
·Borrower experience
Example:
·First-time restaurant owner → higher risk
·Experienced operator → stronger profile
Fix:
·Partner with experienced operators
·Highlight transferable skills
·Provide a strong business plan
6. ❌ Incomplete or Disorganized Documentation
This is the silent killer.
Missing:
·Tax returns
·Personal financial statements
·Business plans
👉 Delays = doubt = decline
Fix:
·Submit a complete, organized package upfront
·Anticipate lender requests
·Move fast and stay responsive
🧠 The Real Insight: SBA Is a Story + Structure Game
Underwriting is not just numbers.
It’s a narrative backed by data.
Strong deals clearly answer:
·How does this loan get repaid?
·What happens if things go wrong?
·Why is this borrower the right operator?
💡 How to Get Your SBA Deal Approved
At Medallion Funds, we position deals to win by focusing on:
✔️ Proper deal structuring
✔️ Lender matching (600+ options)
✔️ Clean financial presentation
✔️ Risk mitigation strategies
✔️ Clear borrower story
📞 Final Thought
Most SBA denials are preventable.
If you’re applying for:
·SBA 7(a) loans
·SBA 504 loans
·Business acquisitions
·Owner-occupied real estate
👉 Strategy matters more than you think.
Work with a broker who understands underwriting—not just applications.
📞 Call to Action
If you're buying, refinancing, or structuring a commercial deal in the next 12 months:
Let’s build the deal the right way — before it ever hits underwriting.
Bill Rapp
Medallion Funds
🌐 https://billrapponline.com/
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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
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 ©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/