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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🏗️ What Is a Capital Stack in CRE? | Understanding the Building Blocks of Real Estate Finance 💰
🏗️ What Is a Capital Stack in CRE? | Understanding the Building Blocks of Real Estate Finance 💰
💼 Breaking Down the Capital Stack: How Investors and Lenders Structure CRE Deals 🏢
🏢 What Is a Capital Stack in Commercial Real Estate (CRE)?
In commercial real estate (CRE), understanding the capital stack is essential — it’s the foundation that determines who gets paid first, who takes the most risk, and how returns are distributed. Whether you’re a developer, investor, or lender, knowing how a deal’s capital stack is structured gives you a clearer picture of potential risk and reward.
💡 What Is a Capital Stack?
The capital stack represents the hierarchy of all capital invested in a commercial real estate project — from debt to equity. Each “layer” of the stack carries different levels of risk, priority, and return. Generally, the lower the layer, the lower the risk — and the lower the potential return.
The four main layers include:
1.Senior Debt – The foundation of most deals. This is usually provided by banks or institutional lenders and has first claim on cash flow and collateral.
2.Mezzanine Debt – A higher-risk loan that sits between senior debt and equity. Mezz lenders often receive higher interest or warrants.
3.Preferred Equity – Investors here get priority over common equity but don’t have the same security as debt holders.
4.Common Equity – The riskiest but most rewarding position. Common equity investors are paid last but enjoy the upside of appreciation and profit.
📊 Why the Capital Stack Matters
Understanding the capital stack helps you:
·Gauge risk exposure — Know where your money sits in the repayment order.
·Negotiate better terms — Lenders and investors structure deals based on perceived risk.
·Plan your financing strategy — Optimize leverage by blending different layers effectively.
For mortgage brokers and investors, structuring the right capital stack can make or break a deal. At Medallion Funds, we help investors, developers, and business owners align their debt and equity structure to maximize returns while minimizing exposure.
🧮 Example: A Simple Capital Stack Breakdown
Let’s say you’re developing a $10M retail center:
·Senior Debt: $6M from a bank at 6%
·Mezzanine Debt: $1M from a private lender at 10%
·Preferred Equity: $1.5M from an investor group with an 8% preferred return
·Common Equity: $1.5M from the developer’s own funds
This layered approach allows the project to be financed efficiently while balancing risk and reward among stakeholders.
🧠 Pro Tip
Investors who understand how to blend capital sources — from traditional banks to private capital — gain a competitive advantage. They can close deals faster, negotiate better terms, and attract partners who value strong deal structuring.
⚙️ Final Thoughts
The capital stack isn’t just financial jargon — it’s the blueprint for every commercial real estate transaction. Knowing where you stand in the stack gives you clarity, control, and confidence in your investment decisions.
At Medallion Funds, we specialize in helping borrowers and investors structure winning capital stacks that align with their goals and risk tolerance.
📞 Schedule a strategy call today: 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/