Flagstar HELOC Lender Review

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ByChristopher Boston
Edited byVictoria Copans
ByChristopher Boston
Edited byVictoria Copans

Updated: November 28, 2023

Advertising & Editorial Disclosure

Flagstar Bank offers flexible HELOC amounts ranging from $10,000 to $1 million and varied options for accessing funds. It appreciates borrowers who value transparency in fees and those open to autopay. However, it might not be the go-to lender for Texas property owners or those preferring live chat customer service. Flagstar is a good fit for borrowers seeking high loan amounts and residing in the states where the bank operates.


  • Flagstar

    • 8.74% to 21%APR Range
    • 680Minimum Credit Score
    • $10,000 to $1,000,000Loan Amount Range
    • 10-year draw period; 20-year repayment periodRepayment Terms

    Flagstar Bank stands out for its flexibility and opportunities for savings when it comes to HELOCs. An attractive feature is the ease of access — you can apply online, over the phone or in person at a local branch. When it's time to draw funds, you can use HELOC checks, visit a local branch or make a phone call. This level of accessibility is tailored to fit your comfort and schedule, making the process smooth and hassle-free.

    Flagstar also offers savings if you set up automatic monthly payments from a Flagstar account during the application process. That gives you a 0.25% interest rate discount that translates to lower monthly payments, saving you a considerable amount over time. Moreover, Flagstar doesn't charge application, late or maintenance fees, and this transparency ensures you know exactly what you're getting into, avoiding any unpleasant financial surprises down the line.

    Flagstar's HELOC offerings blend flexible access, potential savings and clear upfront fees. Its straightforward approach, competitive loan terms and draw periods position it as a solid choice among HELOC lenders.

    Pros

    • Multiple methods to apply and access funds
    • Offers a 0.25% interest rate discount through automatic payments
    • Loan amounts ranges from $10,000 to $1 million
    • No application or late fees
    • In-depth online resources for borrower education

    Cons

    • Properties in Texas are not eligible for HELOC
    • No live chat customer service option
    • You must keep the HELOC open for 36 months to avoid certain closing fees
    Flagstar

Flagstar Features

Exploring what a Flagstar HELOC offers allows you to understand whether it's a lender worth considering. For example, it's smart to understand what you can use the funds for, as well as the fees, draw and repayment periods and loan amounts upfront. Flagstar also has a customer service team ready to guide you. Here are more Flagstar features to help you decide if it aligns with your financial goals.

What You Can Use Funds For

Some lenders might limit how you can spend this money, but Flagstar offers a flexible approach. Everyone’s financial journey is unique, making this flexibility an advantage. Here are the various ways you can allocate the funds from a Flagstar HELOC:

  • Remodeling and Renovation: A Flagstar HELOC can finance a kitchen remodel or a new room, making home improvement projects feasible and less burdensome.

  • Home Maintenance: Regular upkeep like roof repairs or plumbing fixes are crucial to maintain your home’s value and ensure a safe living environment. Flagstar’s HELOC can cover these recurring costs, ensuring your home remains in tip-top shape without draining your savings.

  • Debt Consolidation: Consolidating multiple debts with high interest rates into your Flagstar HELOC could be a smart move. It can potentially lower your overall interest rate and offer a more straightforward repayment structure, making managing your finances easier.

  • Tuition Payments: Flagstar stands by you in your pursuit of higher education by covering tuition fees, easing the financial burden and helping you focus on your studies.

  • Major Purchases: Major purchases are part of life, be they new cars or essential home appliances. Flagstar’s HELOC can help spread out these substantial costs, making them more manageable and less stressful.

  • Emergencies: A financial cushion like a Flagstar HELOC can be a lifesaver. Whether it’s medical emergencies or urgent home repairs, having a backup provides peace of mind.

Flagstar’s flexible HELOC can be an effective financial companion aiding your various life stages, ensuring you have the monetary support you need.

Flagstar HELOC Fees and Discounts

The fees attached to your HELOC affect the overall cost. Flagstar doesn't charge application, late or maintenance fees, and you can also pay off your credit line early without extra charges. However, this doesn't mean you won't encounter any costs during the lifetime of your loan. Here are some of them:

  • Annual Fee: Flagstar charges a $75 annual fee for your HELOC, but this fee is waived for the first year, which is a nice saving upfront.

  • Closing Fees: If you decide to close your HELOC before 36 months, you must pay the closing fees. These include title, appraisal, document signing and recording fees. However, if you keep your HELOC past this timeline, you can avoid them.

  • Lender's Title Insurance: For loan amounts over $500,000, you'll need to pay for lender's title insurance, a one-time cost that protects Flagstar's interest in your property.

  • Government Taxes and Fees: You must cover all applicable government taxes and fees during the closing process. That's standard practice and complies with the law.

Understanding a Flagstaff HELOC isn't just about the fees — there's a way to reduce your interest rate, too. If you set up monthly automatic payments from a Flagstar deposit account at application, you can enjoy a 0.25% interest rate discount.

Draw and Repayment Periods

A HELOC's draw and repayment periods impact how you manage your repayments. With Flagstar, you get a 10-year draw period where you can choose how you want to repay. Here are your options:

  • Interest-only: Your minimum payment will either be $100 or the sum of the finance charges, fees and other costs for that billing cycle, whichever is larger.

  • Principal and Interest: Your minimum payment will be $100 or an amount that ensures you repay the account balance in full by the maturity date, plus any finance charges, fees and other costs for that billing cycle.

The initial flexibility during the draw period lets you manage your finances according to your situation. Opting for interest-only payments could lower your initial repayment amount, which might be beneficial if you anticipate higher income in the future. On the other hand, choosing the principal and interest option helps you reduce the loan balance gradually from the start, which is a prudent approach to long-term financial stability.

Following the draw phase, a 20-year repayment period begins. During this phase, your minimum payment every month will be tailored to ensure the full repayment of your loan by the maturity date. If you initially opted for an interest-only payment structure, it's best to prepare for an increase in your monthly payment.

HELOC Limits and Interest Rates

Flagstar offers a variable interest rate for its home equity line of credit (HELOC), which means the rate can go up or down over time based on market conditions. This could be an advantage if rates go down, but it's also important to budget for possible rate increases. As of October 28, 2023, the variable Annual Percentage Rate (APR) for a new HELOC account ranges from 8.74% to 21.00%.

Regarding HELOC limits, Flagstar provides a range to cater to different needs. You can borrow anywhere from $10,000 to $1 million, given that your combined loan-to-value (CLTV) ratio is 85% or lower. That gives you flexibility whether you have a smaller project or a larger financial need.

These options will help you find a loan term that fits your financial situation. Understanding how your interest rate may vary over time can help you make an effective budget.

Customer Service

Good customer service is key when choosing a HELOC lender. Flagstar makes reaching out simple. You can connect with them in several ways:

  • Phone: Reach out at 1-800-968-7700 from Monday to Friday, 7:30 a.m. to 8 p.m., or Saturday from 7:30 a.m. to 4 p.m. Eastern Time. For HELOC-specific inquiries, dial 855-372-5626 during similar hours.

  • Online Messaging: Log into your account and send a secure message if you prefer online communication.

Flagstar doesn’t offer a live chat, but the available channels ensure you have a real person to talk to for your concerns. These options reflect Flagstar’s commitment to being accessible and providing the help you need when you need it.

Eligibility Criteria

Knowing what Flagstar considers when reviewing your HELOC application prepares you for a smoother process and better chances of approval. It primarily looks at the following factors: how well you've managed past debts, the type of property you have, the amount of equity you have and your ability to repay your loan. These can help you gauge where you stand and what to expect when you apply for a Flagstar HELOC.

Minimum Credit Score

Flagstar Bank requires a minimum credit score of 680 if you apply for a HELOC on your primary residence. However, if the property is a secondary home, the minimum credit score requirement bumps up to 700. Whether you meet these credit score thresholds can be a considerable factor in Flagstar's decision to approve your HELOC application.

Your credit score is like a financial report card, showing how well you've handled money in the past. A higher score can improve your chances of approval and may also get you a larger loan amount. However, if your score is near the minimum, you might get approved for a lesser amount. Knowing your credit standing and understanding Flagstar's requirements is wise, as it gives you a clear idea of your standing when applying for a HELOC.

Property Type and Home Equity

Flagstar Bank allows you to secure a HELOC against your primary or secondary residence. Eligible properties include 1- to 4-unit residential and modular homes for primary residences and 1-unit residential homes for secondary residences. You must have property insurance, and if your property is in a flood-prone area, you'll need flood insurance, too. However, if your property is in Texas, it's not eligible for a Flagstar HELOC.

While Flagstar doesn't have a stated minimum equity requirement, having a good amount of equity in your home can improve your eligibility. Typically, lenders look for a substantial amount of equity, often around 15% to 20%, before approving a HELOC.

Income and Employment

Flagstar Bank ensures you can handle a HELOC by scrutinizing your income and employment status. To verify your income, you must provide recent pay stubs, tax returns or other documents that confirm your earnings. Those demonstrate your capability to manage the HELOC repayments over time.

Flagstar also pays attention to your debt-to-income ratio (DTI), which needs to be 45% or lower. A lower DTI signals a comfortable balance between your income and debt, suggesting to Flagstar that you can manage the new debt from the HELOC without straining your finances. Although there isn't a specified minimum income requirement, a lower DTI and verifiable steady income indicate that you're a reliable candidate for a HELOC.

Is Flagstar Right For You?

Determining if Flagstar is the right HELOC lender for you is crucial to making informed financial decisions. By evaluating its features and requirements against your financial situation and needs, you ensure a match that can serve you well over the loan term. This assessment could lead to a financial partnership that supports your goals, ultimately leading to a smoother loan experience.

Who May Benefit from a HELOC from Flagstar

Flagstar's multi-channel application process and diverse fund access methods can be appealing to those who value flexibility. The bank accommodates your preference, whether you're comfortable applying online, calling or visiting a branch. Post-approval, you also have several ways to access your funds.

Homeowners who prioritize fee transparency may also appreciate Flagstar's straightforward cost structure. You'll have a clear idea of the fees involved from the start, so you know the financial commitment required.

Those open to setting up automatic monthly payments from a Flagstar account may find the lender's HELOC a good fit. Besides streamlining your payment process, it also offers a 0.25% interest rate discount, making this option convenient and cost-effective.

Lastly, those needing substantial loan amounts will find Flagstar's loan range of $10,000 to $1 million beneficial. That means you can accommodate various financial needs, from modest home improvements to significant investments.

Who Shouldn’t Secure a HELOC from Flagstar

Flagstar Bank may not be the ideal HELOC lender for certain borrowers. For example, those who own property in Texas will find Flagstar's services inaccessible as the bank doesn't extend its HELOC offerings to the Lonestar state. Texas residents will need to seek alternatives.

Some borrowers prefer quick answers and immediate support. Unfortunately, Flagstar’s lack of live chat services could be a deterrent. Those preferring real-time online engagement may want to consider other lenders.

Flagstar might also not be a good match for those searching for short-term financial solutions. The bank necessitates that the HELOC remain open for a minimum of 36 months to avoid certain fees. This stipulation could be inconvenient for borrowers planning shorter financial engagements, nudging them towards lenders with more flexible terms.

How to Apply

Being well-informed about the steps involved in securing a Flagstar HELOC equips you with the necessary knowledge to navigate the application and approval phases. It can potentially expedite the process, bringing you closer to accessing the funds you need, while also helping you to make informed decisions that could save you money in the long run.

1
Starting the Application

Your first step is to initiate the application. You can do it online, over the phone by calling 866-379-0270 or in-person at a local Flagstar branch. By opening a Flagstar account before applying for the HELOC and setting up automatic monthly payments during the application process, you’ll benefit from a 0.25% interest rate discount.

2
Providing Additional Information

If you start your application online, you’ll need to share more about your primary mortgage like the original amount, remaining balance, your interest rate and monthly payment. You’ll also provide your driver’s license information and some details about your personal finances.

3
Getting Approved

Once Flagstar reviews and approves your application, you transition into the phase of accessing your funds.

4
Accessing Your Funds

Post-approval, you'll have several ways to draw funds. You can use the HELOC checks sent to you, visit a local branch or simply call (888) 248-6423.

Knowing the steps clears the path for a smooth and positive HELOC experience with Flagstar.

What to Do If You’re Denied

A denial on your HELOC application from Flagstar Bank can be disheartening. However, you can take various steps to understand the denial, improve your elgibility or explore other avenues. Here are some to keep in mind:

  • Understand Denial Reasons: The first step is to understand why your application was denied. Flagstar, like other lenders, should provide you with the reasons for denial. It could be due to a low credit score, high debt-to-income ratio or insufficient equity in your home.

  • Improve Eligibility: Once you know the details, work on improving your eligibility. This could include boosting your credit score by paying down debts, rectifying errors on your credit report or increasing the equity in your home.

  • Reapply: After improving your financial standing, consider reapplying for a HELOC with Flagstar. A stronger financial profile may result in approval during your second attempt.

  • Consider Alternative Financing Options: Explore other financing options like personal loans, home equity loans or lines of credit from different lenders. These may have different eligibility requirements that align better with your current financial situation.

  • Seek Financial Counseling: Engage with a financial counselor to better understand your financial position and the steps you can take to improve your eligibility for a HELOC or other financing options in the future.

A denied application can be an opportunity to improve your borrower profile and put yourself in a position for future financial success.

FAQ About Flagstar as a HELOC Lender

MoneyGeek addressed common questions to help you gain a clearer understanding of what to expect when opting for a HELOC with Flagstar.

What is the minimum credit score required for a Flagstar HELOC?
How quickly can I receive funds with Flagstar?
What states is Flagstar HELOC available in?
Are there any fees associated with a Flagstar HELOC?
What can I use a Flagstar HELOC for?
How can I contact Flagstar's customer service?

About Christopher Boston


Christopher Boston headshot

Christopher (Croix) Boston was the Head of Loans content at MoneyGeek, with over five years of experience researching higher education, mortgage and personal loans.

Boston has a bachelor's degree from the Seattle Pacific University. They pride themselves in using their skills and experience to create quality content that helps people save and spend efficiently.