Mortgage Do's And Don'ts
Mortgages can be tricky, and it's easy to make mistakes that can end up costing you dearly. That's why we've put together this list of Mortgage Do's and Do not's to help you navigate the process with ease - and a little bit of humor.
DO: Shop around for the best mortgage rates
DON'T: Assume your bank will give you the best rate just because you have a checking account there. Remember, loyalty is a two-way street.
DO: Have a budget in mind
DON'T: Get in over your head. Just because you can technically afford a million-dollar mansion doesn't mean you should buy one. You don't want to be house-poor and unable to afford groceries.
DO: Get pre-approved before house-hunting
.
DON'T: Assume you'll be approved for a mortgage just because you have good credit. Pre-approval is important because it gives you a better idea of how much house you can afford and shows sellers that you're serious.
.
DO: Consider your future plans
.
DON'T: Assume you'll live in your new house forever. Life happens, and you may need to sell sooner than you think. Make sure you're not getting into a mortgage that you can't realistically afford if you need to move in a few years.
DO: Get pre-approved before house-hunting
.
DON'T: Assume you'll be approved for a mortgage just because you have good credit. Pre-approval is important because it gives you a better idea of how much house you can afford and shows sellers that you're serious.
.
DO: Consider your future plans
.
DON'T: Assume you'll live in your new house forever. Life happens, and you may need to sell sooner than you think. Make sure you're not getting into a mortgage that you can't realistically afford if you need to move in a few years.
DO: Read the fine print
.
DON'T: Sign on the dotted line without reading the terms and conditions. There may be hidden fees or clauses that could come back to haunt you later.
.
DO: Be prepared for unexpected expenses
.
DON'T: Assume everything will go smoothly. There may be unforeseen expenses, like a leaky roof or a broken furnace, that can quickly drain your savings. Be sure to budget for these types of surprises.
DO: Read the fine print
.
DON'T: Sign on the dotted line without reading the terms and conditions. There may be hidden fees or clauses that could come back to haunt you later.
.
DO: Be prepared for unexpected expenses
.
DON'T: Assume everything will go smoothly. There may be unforeseen expenses, like a leaky roof or a broken furnace, that can quickly drain your savings. Be sure to budget for these types of surprises.
DO: Have a good sense of humor
.
DON'T: Take everything too seriously. Yes, buying a house and getting a mortgage can be stressful, but try to find the humor in the situation. After all, laughter is the best medicine for a stressful day.
.
By following these Mortgage Do's and Do not's, you'll be well on your way to successfully navigating the mortgage process - with a smile on your face. Good luck, and happy house hunting!
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How to Build a Real Estate Portfolio Without Tax Returns
For many real estate investors, tax returns are not a reliable reflection of true income. Aggressive write-offs, depreciation, and legitimate tax strategies often reduce taxable income on paperāmaking it difficult to qualify for traditional mortgages. The good news is this: you can still build a real estate portfolio without tax returns if you understand how alternative lending works.
As a mortgage broker, my role is to structure financing around cash flow, assets, and deal fundamentalsānot just W-2s and tax transcripts.
Why Traditional Loans Fall Short for Investors
Conventional lenders rely heavily on:
Ā·Two years of tax returns
Ā·Adjusted gross income
Ā·Debt-to-income ratios
For self-employed borrowers and investors, this often creates unnecessary friction. Fortunately, portfolio and non-QM lenders underwrite deals differently.
Key Loan Options That Do NOT Require Tax Returns
1. DSCR Loans (Debt Service Coverage Ratio)
DSCR loans qualify borrowers based on the propertyās incomeānot personal income. If rental cash flow covers the mortgage payment, tax returns are typically not required.
Best for:
Ā·1ā4 unit investment properties
Ā·Long-term rental portfolios
Ā·Investors scaling multiple properties
2. Bank Statement Loans
Instead of tax returns, lenders review 12ā24 months of personal or business bank statements to calculate income.
Best for:
Ā·Self-employed borrowers
Ā·Business owners
Ā·Contractors and gig workers
3. Asset-Based Lending
Qualification is driven by liquid assets, reserves, and overall net worth rather than income documentation.
Best for:
Ā·High-net-worth investors
Ā·Retirees
Ā·Investors repositioning capital
4. Portfolio & Private Lenders
These lenders keep loans in-house and can customize underwriting guidelines around the deal itself.
Best for:
Ā·Unique properties
Ā·Mixed-use assets
Ā·Investors with complex income
How to Strategically Build a Portfolio Without Tax Returns
Ā·Focus on cash-flow-positive properties
Ā·Keep clean operating statements and leases
Ā·Maintain strong reserves
Ā·Work with a broker who understands investor underwriting
Ā·Use DSCR loans to scale instead of re-qualifying personally every time
Why Working With a Mortgage Broker Matters
Banks sell products. Brokers design strategies.
As a broker, I match your investment goals with the right capital sourceāwhether thatās DSCR, bank statement, or asset-based lendingāso your tax strategy doesnāt limit your growth strategy.
Final Thought
Not having tax returns does not disqualify you from building wealth through real estate. It simply means you need smarter loan structures, better lenders, and an advisor who understands investor finance.
If you want to scale your portfolio without traditional income documentation, this is exactly what I help investors do every day.
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Ā© 2023-2024 Bill Rapp, Medallion Funds LLC, Director of Capital Advisory
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