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  • Buy a Home
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    • Our Story
    • Information Center
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Frequently Asked Questions

Need help? Be sure to visit our support forums for answers to your questions!

Do I need great credit to get a mortgage? Expand

Not necessarily, but it will certainly help. It is possible to get a conventional mortgage with a FICO credit score as low as 620, and you can obtain a higher-cost FHA mortgage with a score in the 500s. However, be aware that the lower your score, the higher your interest rate will be. You can find a current list of mortgage rates broken down by reaching out to one of our experienced professionals and asking scenario specific questions.

How much of a down payment do I need? Expand

The short answer is that you can get a conventional mortgage with as little as 3% down, an FHA loan with 3.5% down, and a VA or USDA loan with no money down at all. However, with a conventional or FHA loan, you'll have to pay private mortgage insurance, aka PMI, if your down payment is less than 20% of the home's sale price. (Those payments won't be a permanent fixture in your monthly payments, however. Once the loan-to-value ratio on your mortgage falls to 80%, you can ask your lender to drop them.
Give us a call and we can assess which one of these programs you can qualify for and how much of a down payment you would need to qualify for a home.

What are closing costs, and how much should I expect them to be? Expand

The term "closing costs" refer to all of the charges you'll need to pay before your loan is completed. This can include origination fees, title insurance, prepaid escrows, and more. Closing costs can vary significantly depending on loan product, agents working on the transaction and seller preferences.

What does it mean to "lock" my interest rate? Expand

A rate lock means that you're guaranteed today's mortgage interest rate for some predetermined period, typically 30 to 60 days. If interest rates have been trending upward, it's generally a good idea to lock in your rate. While the prevailing mortgage rate doesn't usually make a big move in a month or two, it's certainly possible.

What are discount points, and should I pay them? Expand
Discount points are money paid up front on your mortgage in exchange for a lower interest rate. One "point" is equal to 1% of the loan amount, so on a $200,000 mortgage, one discount point would be $2,000. Discount points are tax-deductible, and mathematically, if the interest savings over the life of the loan is greater than the points paid, it can be worth it. With Megastar you will have a veteraned professional who can help you weigh your options.
Should I get a 15-year or 30-year term loan? Expand
This is entirely up to your financial standing and discretion. If you can afford the higher monthly payments, a 15-year mortgage usually comes with a better interest rate than a 30-year version. Not only will you pay off the house quicker, but you can save a tremendous amount of interest. On the other hand, a 30-year mortgage will cost less per month, allowing you to afford a bigger or more preferred home.
What documentation do I need? Expand

We may ask for many different items, but in general, be prepared to show all of the following:

  • Income verification (Last two years' tax returns, W-2s, 1099s, and your last few pay stubs)
  • Drivers' license and Social Security card (or alternative ID)
  • Bank statements
  • Proof of funds to close (and an explanation of where they came from, if it's not obvious)
  • If some or all of your down payment is coming from a gift, you will need a gift letter from the source of the funds that confirm they are gift funds, not a loan.

MegaStar Financial Corp. NMLS #3043, DBO license #603 8649
1455 East G Street, Suite A Oakdale, CA 95361-4096
NMLS #235816 CA CFL license #607 2944

FHA approvedLoans will be made pursuant to a Department of Corporations California Finance Lenders Law License.
License #607-2944. NMLS#3043

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