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Flagstar Mortgage review

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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.

Details

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.

Pros

  • Real-time rates.
  • Create your own term.
  • Considers alternative credit data.
  • Building loan products.

Cons

  • High closing costs.
  • Limited bank branches.
  • Low app ratings.

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 types of loans does Flagstar offer?

Conventional

This is the most popular type of mortgage. It’s available for homes up to $484,350 in most areas, and you can choose from a fixed or adjustable interest rate.

FHA

An FHA loan is designed for borrowers with low to moderate income and backed by the Federal Housing Administration. These loans only require a 3.5% down payment, and you can often qualify with a lower credit score than you’d need for a conventional mortgage.

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

VA

VA loans are available to qualifying veterans, military service members and some military spouses. Offered by private lenders and guaranteed by the VA, this type of mortgage can get you into a house with $0 down.

USDA

USDA loans are available for $0 down to homebuyers who meet income requirements and purchase a home in an eligible rural area. You can use the USDA website to check if your home qualifies.

Jumbo

A jumbo mortgage is any mortgage too big to be acquired by Fannie Mae or Freddie Mac, the two main government lenders. As of 2019, loans over $484,350 will generally be jumbo loans, with the exception of homes in certain areas with a slightly higher limit for conventional loans.

Other loan types

  • Home equity. A home equity loan lets you borrow against the value you’ve built up in your house.
  • Refinance. A refinance mortgage lets you close out your current mortgage and switch to a new provider to get a better interest rate or different loan term.

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.

Flagstar fees

Flagstar doesn’t disclose all of its mortgage fees online, so you’ll want to talk with your loan officer about fees before signing any paperwork. Common mortgage fees include:

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

Requirements

Requirements to qualify vary based on the type of loan you’re applying for. Generally, you’ll need a:

  • 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%

Documentation

Flagstar may request:
  • 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.

Pros and cons of getting a mortgage with Flagstar

Pros

  • 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 as credit data for FHA borrowers.
  • Building loan products. Flagstar is known for offering three types of construction loans, plus a renovation loan.

Cons

  • 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 Flagstar to other lenders

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How to get a home loan with Flagstar

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.

  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.
    Flagstar application screen 4
  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.
    Flagstar application screen 6
  6. Make any necessary Declarations.
  7. Upload supporting documents and Submit Your Application.

What is Flagstar?

Flagstar Bank was first opened in 1987, and has since become the fifth largest mortgage originator in the country. It also offers personal loans, business loans and banking and investment accounts, making it a one-stop financial shop for customers.

As of August 2019, it has an A+ rating with the BBB, but it has a one-star rating out of five, with 59 reviews. Reviews elsewhere online are mixed, with some customers frustrated at the online portal and the hassle of getting money out of their escrow account, and other customers praising the lender for its great communication and fast application process. Many of the negative reviews are from customers who originally chose another provider and had their mortgage sold to Flagstar.

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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