Flagstar Bank: 2020 Home Equity Review

Flagstar Bank loans

Flagstar Bank, founded in 1987 and headquartered in Troy, Michigan, offers home equity loans and HELOCs with branches in five states. The lender provides competitive interest rates, high loan amounts and savings in the form of interest rate discounts and no lender closing fees. Its offerings do vary by state, so you’ll have to enter your ZIP code on the website to see which APRs and loan amounts are available where you live.

If you’re looking for a home equity loan or HELOC, here’s what to know about Flagstar Bank and its products.

Flagstar snapshot

Loan types offered Home equity loan, HELOC
APR range Home equity loan: 6.02% (with autopay)
HELOC: 3.99% to 21% (with autopay)
Loan amount range Home equity loan: $10,000 to $1 million
HELOC: $10,000 to $500,000
Minimum credit score required Not specified
Repayment terms Home equity loan: 5 to 20 years
HELOC: 10-year draw period and 20-year repayment period
Average time to approval Not specified

Loan details will vary by location. Loan terms and APRs presented are based on the 49546 ZIP code.

Benefits

Here are some benefits to consider before you submit an application with Flagstar Bank:

  • Competitive interest rates: The lender’s home equity loan rates start at 6.02 percent APR. With the HELOC, rates start at 3.99 percent. According to Bankrate, the average home equity loan and HELOC rates are 5.23 percent and 4.88 percent, respectively, as of early June 2020.
  • High loan amounts: The limit on Flagstar’s home equity loans is $1 million — although you may be subject to lower limits based on your loan-to-value ratio.
  • No closing costs: There are no lender closing costs on the bank’s home equity loan product and no prepayment penalties. The lender also doesn’t charge closing costs on HELOCs, but you may be on the hook if you pay off the loan early.

Drawbacks

A few of Flagstar’s drawbacks are:

  • No online application: You can start the application process online by providing your contact information. But to complete the process, you’ll need to speak with a loan specialist over the phone or visit a local branch.
  • Limited geographical presence: Flagstar Bank has branches in only five states: California, Indiana, Michigan, Ohio and Wisconsin. There are home loan centers in other states, but if you want in-person service, your options may be limited.
  • Little transparency: Flagstar doesn’t disclose any eligibility requirements for its home equity products, so you’ll need to speak with a representative or apply for a loan to find out if you qualify.

Types of fees charged

There are no closing costs on HELOCs other than government taxes and fees, but you will need to pay lender closing fees if you close the account within 36 months. If you borrow more than $500,000 on either product, you’ll need to pay for lender’s title insurance. All HELOCs come with a $75 annual fee, waived for the first year.

Both products offer automatic payment discounts: 0.5 percent for HELOCs and 0.25 percent for home equity loans.

Loan products offered

Flagstar Bank offers various mortgage loans and refinance loans, as well as home equity loans and HELOCs.

If you’re interested in a fixed interest rate and a lump-sum payment, a home equity loan may be right for you. Flagstar Bank offers loans from $10,000 to $1 million. Repayment terms include five, 10, 15 and 20 years, giving you flexibility with your monthly payments.

If you’d rather have a revolving line of credit that you can access whenever you need it, a HELOC may be a better choice. With Flagstar Bank’s HELOC, you can borrow between $10,000 and $500,000, with a 10-year draw period and a 20-year repayment term.

The lender offers interest-only payments during the draw period, but there is a minimum monthly payment of $100.

How to qualify for a home equity loan with Flagstar

The property you would like to use to secure your HELOC must be your residential home, which can include one- to four-unit owner-occupied properties, modular homes and owner-occupied secondary homes. To maintain the loan or HELOC, homeowners insurance and, in some cases, flood insurance are required.

View home equity rates

Tap into the value you have in your home to get the funds you need.

How to get started

To apply for a home equity product, you can visit a local Flagstar bank branch, call the bank or share some information through the bank’s website and get a follow-up call from a loan specialist, who will walk you through the remainder of the process.

During this process, you may need to provide some documentation verifying your income and information about the property.

If you have any questions along the way, you can call 888-643-5155 to reach the bank’s home lending division. Alternatively, you can send a message through the bank’s website.

Before you accept a loan or line of credit from Flagstar Bank, however, be sure to compare its terms with those of other home equity lenders. This process can take time, but it will help you ensure that you get the right product for your needs.

How Bankrate rates Flagstar Bank

Overall Score 4.1
Availability 3.6
Affordability 4.5
Customer Experience 4.3

Editorial disclosure: All reviews are prepared by Bankrate.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the lender’s website for the most current information.