Flagstar mortgage review | finder.com

Flagstar Mortgage review

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Flagstar Mortgage
  • FDIC Member
  • Equal Housing Lender

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Compare and get a mortgage from companies like Flagstar Mortgage.

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This lender stands out for its construction loans, but closing costs can be hefty.

Thanks to its flexibility, Flagstar is one of the highest-volume lenders in the US. Weigh its pros and cons to find out if it’s the right fit for your purchase or renovation.

Name Flagstar Mortgage
Description With a range of competitively priced mortgage options, Flagstar can meet virtually any borrowing need.
Loan types Purchase, Jumbo, Fixed, Adjustable, FHA, VA, Home Equity, Refinance
Minimum credit 620
Minimum down payment 3%
Origination fee $1000
Other fees Flagstar doesn’t disclose all of its mortgage fees online, but you can expect to pay:

-Appraisal fee
-Title insurance fee
-Origination fee
-Recording fee
-Underwriting fee
-Processing fee

The lender is known for charging high origination fees.

What do customers say about Flagstar?


Flagstar Bank isn’t accredited with the Better Business Bureau, but it does hold an A+ rating for its operations and interaction. The BBB has recorded 143 complaints in the past three years, most linked to loan servicing and problems with the payment process. Flagstar has earned a one-star customer rating based on 50 reviews — but it’s worth noting that these are based on the bank as a whole and not its mortgage department.

Across other online forums, customers praise the personalized service from loan officers, and many name the officer who made their complicated process easier. Customers also appreciate the construction and agricultural loans and the ability to lock in rates.

What makes Flagstar unique?

Like many lenders, Flagstar participates in programs to help low- to moderate-income borrowers and potential high earners. But it stands out for its renovation and construction loans.

Construction loans

The bank recently rolled out three construction loans:

  • Construction draw loans are designed for those who want to build a home. During the construction period when you’re drawing on your loan, you’ll only need to pay interest on the drawn balance. Flagstar will finance primary residences up to $3 million and secondary residences up to $2.5 million.
  • One-close loans allow you to construct and finance your new home with one application and one closing. This streamlines the process and means you only have to pay a single set of closing costs.
  • FHA construction-to-permanent loans are backed by the government and also have a one-time closing. When construction is complete, you’ll choose a permanent mortgage product that suits you.
Flagstar also allows borrowers to lock in their interest rates before and during construction.

Accepts other credit sources

Flagstar accepts rental payments, utility bills and other nontraditional credit sources for borrowers hoping to qualify for an FHA loan.

Do I qualify for a loan with Flagstar?

It depends on the loan. Typically, you’ll need to meet these requirements:

  • Minimum credit score of 580 for FHA loans, 620 for conventional and VA loans and 640 for USDA loans
  • Maximum debt-to-income ratio of 43%
  • Loan-to-value ratio of 80%

What are the benefits of getting a mortgage through Flagstar?

Getting a home loan with Flagstar has these benefits:

  • Online application. Apply or prequalify for a loan online.
  • Real-time rates. Flagstar displays its current rates on the website, making it easy to compare lenders.
  • Create your own term. If you’re not sold on the traditional 15- or 30-year terms, work with a Flagstar loan officer to create your own term.
  • Considers alternative credit data. The lender accepts rent and utility payments.
  • Building loan products. Flagstar is known for offering three types of construction loans, plus a renovation loan.
  • Embraces government programs. The lender participates in low down payment programs to help first-time homebuyers, limited-income borrowers and rural property owners.

What to watch out for

Flagstar has its drawbacks, including:

  • High closing costs. The average loan comes with a $1000 origination fee.
  • Limited bank branches. Flagstar’s mortgage division only operates out of 88 branches across Michigan and California. The bank has a network of loan officers in each state, but if you prefer face to face interaction, you’ll need to live in one of the states with branches.
  • Low app ratings. The mobile app has a two-star rating for both iPhone and Android, and customers complain about issues with app updates and functionality.

Compare to other lenders

Name Product Min. down payment Origination fee
3.5%
Depends
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Vylla
Vylla
3%
Depends
Explore financing options and home shopping services all on the same website.
3%
0.5% to 1.0%
Flexible options, fast approvals and support online backed by a trusted brand.
3%
0.5% to 1.0%
Streamline your mortgage from quote to final payment — all from your computer or phone.

Compare up to 4 providers

How do I get started?

Fill out the online form to kickstart the process. Once you’ve done that, you have the option of completing the application digitally or waiting for a callback from a loan officer.

Either way, these are the steps:

  1. Go to the Flagstar website. On the homepage, hover over Loans. Click Mortgage > Buying a Home.
  2. Press Apply Now.
  3. Enter your Loan Details, Property Type, Down Payment and Credit Score, along with your Contact Information. Click Submit.
  4. You’ll see a message saying your application has been received. If you want to keep going, click Continue to Full Application.
  5. Work your way through the form, answering questions about your Property, Employment, Assets and Liabilities.
  6. Make any necessary Declarations.
  7. Upload supporting documents and Submit Your Application.

Required documentation

Flagstar may request these documents:

  • Recent pay stubs
  • Bank statements
  • Retirement and investment account statements
  • Tax returns
  • W-2 forms
  • Homeowner’s insurance information
  • List of credit cards, plus car, student or home loans.

I got the loan. Now what?

Keep tabs on your mortgage with these tips:

Make timely payments. Choose a payment option that works for you:

  • Online. Set up automatic payments via MyLoans.
  • In person. You can search for a branch close to you on the website.
  • Phone. Call 866-837-4539 to process payment over the phone. You may be charged a convenience fee of $15.
  • Mail. Send a check to:
    • Flagstar Bank, PO Box 660263, Dallas, TX 75266

Manage your mortgage with MyLoans. Log into the online portal at any time to view your loan balance, interest rate and taxes, access your monthly statements and pay your loan.

Boost your principal payment. If you want to pay off your loan faster and save on interest, you can make additional payments to your principal. You must make the payment at the same time as your regular monthly payment. The limit is $15,000. Before doing this, make sure your loan doesn’t have a prepayment penalty.

Contact customer service. Questions? Here’s how to reach the team:

  • Phone. Call 800-968-7700 from Monday to Friday, 7:30 a.m. to 8 p.m. ET and Saturday from 7:30 a.m. to 4 p.m. ET. If you’re outside of the US, dial 248-312-6500.
  • Live chat. Real-time help is available during business hours.
  • Email. Send a secure message via the Contact Us page.
  • In person. Use the search function online to find a branch or loan officer near you.
  • Mail. Address snail mail to:
    • Flagstar Bank, PO Box 660263, Dallas, TX 75266

Bottom line

Flagstar is a flexible lender. It’s one of the best options for borrowers who need an FHA, construction or renovation loan — but the closing costs are on the high side.

Its mortgage officers only work out of California and Michigan, so if you live outside those states, you’ll need to be comfortable with not working face to face with a loan officer. To find a mortgage that meets your needs, compare multiple lenders.

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