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- Flagstar Bank Mortgage Review: Specialty Mortgage Experts
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First-time homebuyers will find a lot of support for their first mortgage with Flagstar Bank Mortgage. And since Flagstar is a full-service bank, eligible borrowers can keep their finances in one place using Flagstar's checking, savings, money market, CDs, health savings accounts, and retirement accounts. Keep reading to find out whether this mortgage lender is the best choice for you.
Best for: Loan variety
Flagstar Bank Mortgage
Rating image, 4.0 out of 5 stars.
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Bottom Line
Flagstar is flexible as it allows a variety of loan types and lengths. It is also a great option for people with above average debt as it has one of the highest allowable debt-to-income ratios.
Full Flagstar Bank Mortgage Review
There are a lot of reasons to love Flagstar Bank, but this lender isn't right for everyone.
Top perks
Specialty loan options. Flagstar Bank offers a wide enough selection to meet most borrowers' needs, including some specialty loans that you won't find everywhere. Some of the harder-to-find mortgage loan programs include:
- Multiple property loan for borrowers with seven to 10 financed properties
- Construction loan
- Renovation loan
- HFA loan: Programs designed to help people become homeowners, including down payment assistance and lower monthly private mortgage insurance (PMI) rates
Online interest rate comparison tool. You can enter your information and get sample interest rates for various options. The Flagstar Bank mortgage rate comparison tool is very handy. It makes it easy to play around with your purchase price, down payment amount, and credit score. Entering different credit score ranges shows you how much you might be able to save if you can raise your score before you apply.
High allowable DTI. Flagstar Mortgage offers conventional loans to borrowers with a debt-to-income ratio (DTI) of up to 50%, which is higher than some other lenders' limits.
Homebuyer education. The Flagstar Bank mortgage website offers easy-to-find and detailed information about the mortgage process. The section is called the Mortgage Information Center, and it includes information about how to qualify, shop, apply, and manage your mortgage. The FAQ explains everything from homeowners insurance and PMI to escrow and closing, and even what will happen if you run into financial hardship and need assistance.
Qualification checklist. If you're a first-time home buyer, or you haven't gotten a mortgage in a long time, you can refer to a convenient mortgage qualification checklist on Flagstar Bank's website.
What could be improved
Reputation. Flagstar Bank earns below average ratings on the J.D. Power 2020 U.S. Primary Mortgage Servicer Satisfaction StudyTM, and the J.D. Power 2019 U.S. Primary Mortgage Origination Satisfaction StudyTM. In fact, Flagstar has had a history of below average marks on these studies for the past few years, with customer satisfaction for origination having a poorer showing than customer satisfaction for servicing. It's worth noting, however, that Flagstar Bank has earned an A+ from the Better Business Bureau -- which says that when customers do complain, the bank reaches out and works to find a resolution.
Nationwide HELOC option. If you're considering a home equity line of credit (HELOC), you may need to look elsewhere. A HELOC is only available to borrowers who live in zip codes where Flagstar has a physical presence.
How to Qualify
The qualification criteria that apply to you will depend on which loan program fits your situation best.
For an FHA loan, qualified borrowers need a FICO® Score of at least 580. But if you want a conventional loan, the minimum is 620. For a jumbo loan up to $3 million, you need a 700 or higher.
Your debt-to-income (DTI) ratio is your required total monthly debt payment, including your mortgage payment, compared to your income. Flagstar Bank mortgage allows a DTI up to 50% for conventional loans, but only 43% for a jumbo loan. Some FHA loans allow a DTI between those two numbers.
Expect to make a 20% down payment for a conventional loan from Flagstar Bank mortgage. But don't worry if you can't. Flagstar Bank offers mortgages that require a down payment of as little as 3 to 3.5% (zero if you qualify for a VA loan), as well as mortgage programs in some states that come with down payment assistance.
If you don't meet the criteria for a traditional mortgage loan, Flagstar offers non-qualified mortgages that have different underwriting guidelines. For example, the allowable DTI may be higher. Non-qualified mortgages typically come with a trade-off. For example, if the lender allows a higher DTI, you may need to make a larger down payment. The loan officer at Flagstar can tell you about your options.
Alternatives to consider
Guild Mortgage. If you're looking for down payment assistance, check with Guild Mortgage. Guild is great for first-time homebuyers. This lender offers low down payment mortgages and programs for people who need help getting into homeownership. Guild Mortgage also offers a 17-day closing guarantee, which can be helpful for buyers who need a fast loan closing.
SunTrust. If you need a specialty loan, take a look at SunTrust for comparison. SunTrust is also a full-service financial institution that offers bank accounts as well as mortgages. It offers a full menu of home loan options, as well as HELOCs .
Flagstar Bank is right for you if:
Flagstar Bank is an excellent choice for specialty loans. If you're building a brand-new home or buying one that needs significant renovations, Flagstar Bank mortgage is a great choice to consider. Likewise, Flagstar Bank can meet your needs if you're a borrower who qualifies for a VA loan or a USDA loan.
Flagstar Bank is also a great fit for a low- to moderate-income borrower who wants help with the down payment, or for anyone who needs a low down payment loan. Flagstar also helps first-time homebuyers and anyone who wants to learn about the mortgage process equip themselves with the information they need to make educated decisions and ask the right questions.
About the Author
Kimberly is a personal finance writer/editor, consumer credit expert, and financial literacy advocate. She has lots of degrees and personal experience that make her really good at helping people separate the good from the bad in financial products and habits. She likes to roller skate. Tweet her @rotterwrites.
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