Flagstar Bank Mortgage Review 2022

Flagstar at a glance

Flagstar offers an impressive selection of mortgages for purchase and refinance. Although 2020 Home Mortgage Disclosure Act data indicates that origination fees are on the higher end overall, borrowers who refinance with this lender tend to pay fees that are slightly lower than the median.

Here's a breakdown of Flagstar's overall score:

• Variety of loan types: 5 of 5 stars

• Ease of application: 5 of 5 stars

• Rates and fees: 3 of 5 stars

• Rate transparency: 5 of 5 stars

» MORE: Compare Flagstar with other lenders

Flagstar mortgage loan types

If you live outside of the north-central U.S., you may never have heard of Flagstar Bank. But the savings bank, based in Troy, Michigan, originates home loans in all 50 states and has retail locations in more than half, while deploying a substantial network of more than 2,000 brokers across the nation.

Perhaps more homeowners are familiar with Flagstar in another way: as the payment address for their loans. Most lenders sell their rights to loan servicing — the collection and processing of payments — to providers like Flagstar Bank, which handles the record keeping for more than 1 million borrowers.

Flagstar says it embraces loans backed by the Federal Housing Administration and the Department of Veterans Affairs. FHA loans are a popular option for first-time home buyers. FHA loans require down payments as low as 3.5% and are forgiving for borrowers with limited credit histories or low credit scores. VA loans allow no down payment.

With community-based loan advisors in many parts of the country, Flagstar says its reps are familiar with low-down-payment state bond programs for first-time home buyers and income-limited households, as well as the areas that qualify for rural development mortgages backed by the U.S. Department of Agriculture.

Flagstar extols its expertise in renovation and construction mortgages. The lender says the Fannie Mae HomeStyle loan, FHA 203(k) loan and Flagstar Destination Home loan are among its renovation mortgage options.

Flagstar HELOC: The lender also offers a home equity line of credit, or HELOC, and home equity loans. These second mortgages are one way for homeowners to access existing home equity without refinancing or selling their home. Funds obtained with a second mortgage can be used for expenses such as home improvements, education costs or debt consolidation. Flagstar's home equity loans and lines of credit are available, but only at bank branches in a limited area, mostly in Michigan, the company says. Home equity loans provide a lump sum and your interest rate will never change. A HELOC offers as-you-need-it withdrawal convenience, and you pay interest only on the outstanding balance.

Flagstar ease of application

Selecting the "Apply Now" button on Flagstar’s Home Loans page will take you to what is essentially a contact request page. Enter basic information: purchase/refinance, type of loan, amount, down payment and so on, along with your contact information, and a mortgage loan advisor will contact you.

You also have the option of entering more detailed information about yourself, the property, your employment, and estimates of your assets and liabilities. If you opt for the online application, a loan advisor will be assigned to help you through the process.

Flagstar also offers online document uploads, electronic signature and online loan process tracking.

The bank's customer service phone line offers extended hours Monday through Friday, and is open on Saturdays. Flagstar says each borrower is assigned one loan advisor to talk to during the application process, and one loan processor during underwriting.

Flagstar mortgage rates and fees

One of the most important considerations when choosing a mortgage lender is understanding what the loan will cost. To provide consumers with a general sense of what a lender might charge, NerdWallet scores lenders on two factors regarding fees and mortgage rates, according to the most recently available Home Mortgage Disclosure Act data:

• Flagstar earns 2 of 5 stars for average origination fee.

• Flagstar earns 3 of 5 stars for offered mortgage rates compared with the best available rates on comparable loans.

Borrowers should consider the balance between lender fees and mortgage rates. While it's not always the case, paying upfront fees can lower your mortgage interest rate. Some lenders will charge higher upfront fees to lower their advertised interest rate and make it more attractive. Some lenders just charge higher upfront fees.

You can decide to buy discount points — a fee paid with your closing costs — to reduce your mortgage rate.

Deciding whether you want to pay higher upfront fees is a matter of considering how long you plan to live in your home and how much cash you have to apply toward closing costs when you sign the loan paperwork.

» MORE: 'Should I buy points?' calculator

Flagstar mortgage rate transparency

Information on mortgage rates is readily available on Flagstar's website by navigating to the mortgage section of the menu and selecting "Get a Mortgage Quote." From there, answer at least four questions about the home's value and ZIP code, and you're presented with several loan options, along with rates and APRs.

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