Lessons from thousands of files we’ve underwritten at LoanFunders.com—so you don’t learn them the hard way.

1️⃣ Incomplete Document Packages

Pitfall: Missing bank statements, unsigned contracts, fuzzy rehab numbers—each triggers a new round of “please upload.”
Avoid It: Build a “deal dropbox” with three folders—Property, Borrower, Financials—and label every file with the date and version (e.g., Budget_v2_2024-07-05.xlsx).

2️⃣ Unrealistic ARV or Rent Comps

Pitfall: Inflated after-repair values or rent projections sink trust and stall underwriting.
Avoid It: Pull three closed sales or active leases within one mile and ±10 % square footage. Show screenshots or MLS printouts; let the numbers speak.

3️⃣ Ignoring DSCR & Cash-Flow Metrics

Pitfall: Basing loan size on purchase price instead of the property’s ability to service debt.
Avoid It: Calculate DSCR (NOI ÷ Annual Debt Service) before you write an offer. We target ≥1.15 for best terms.

4️⃣ Under-Budgeting Renovations

Pitfall: “Soft” bids that forget permits, dumpsters, change orders, or contingency.
Avoid It: Require line-item estimates from your GC and add 10 % buffer. Round numbers = red flags; itemized = confidence.

5️⃣ No Interest-Rate Stress Test

Pitfall: Floating-rate bridge loan looks great—until SOFR jumps 200 bps.
Avoid It: Model cash flow at +2 % above quoted rate. If the deal dies on paper there, restructure before you commit.

6️⃣ Skipping Title, Tax & Permit Checks

Pitfall: Discovering a surprise lien or open violation after the term sheet = weeks of delay.
Avoid It: Order a preliminary title search ($100–$150) and pull municipal permit records before submitting.

7️⃣ Over-Leverage & Thin Reserves

Pitfall: Maxing out LTV with no cash left for vacancy or repairs.
Avoid It: Keep at least 6 months of PITIA (principal, interest, taxes, insurance, association) per door—liquid or credit line.

8️⃣ Credit Surprises at Closing

Pitfall: Borrower buys a new truck; FICO drops 40 points; loan terms worsen.
Avoid It: Freeze major credit moves until funding wires. Remind clients: “No new debt, no new inquiries.”

9️⃣ Wrong Entity Structure

Pitfall: Buying in personal name, then scrambling to deed into an LLC, triggering transfer tax or due-on-sale panic.
Avoid It: Form the LLC before contract signing. Have EIN, operating agreement, and resolution ready for the lender.

🔟 Last-Minute Lender Shopping

Pitfall: Switching lenders mid-deal for 25 bps lower rate; appraisal and legal clock restart; seller walks.
Avoid It: Compare options up front, choose a relationship lender, and stay the course. A swift close at 7.25 % beats a busted contract at 7.00 %.

The Fast-Track Checklist

• ☑️ Complete doc packet

• ☑️ Verifiable comps & DSCR ≥ 1.15

• ☑️ Line-item rehab + 10 % contingency

• ☑️ Title, tax, permit pre-check

• ☑️ Six-month reserve plan

• ☑️ Lock entity + credit behavior early

Pin it to your monitor—watch approvals accelerate and headaches disappear.

Need a Partner Who Helps You Dodge Every Pitfall?

At LoanFunders.com we flag these issues before they slow you down. From DSCR rentals to bridge-and-build construction loans, our team streamlines underwriting so you can focus on the deal, not the drama.

Let’s close clean, clear, and on time—every time.