Flagstar Mortgage Review: Pros, Cons, Rates, What to Expect

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flagstar bank logo on business office building headquarters

Flagstar Mortgage is a popular choice for many homebuyers. In addition to maintaining their financial stability, they offer a broad range of tools that are very helpful. In our article, we’re going to review what Flagstar Mortgage has to offer. We’ll also cover other important details like their customer service performance.

Flagstar Mortgage – Details and Overview

Flagstar Mortgage, otherwise known as Flagstar Bank, is one of the largest home mortgage lenders in the United States. As of the end of 2016, they hold an estimated $16 billion in total assets company-wide. The company was originally founded in 1987 under the name First Security Savings Bank. They currently have an A+ rating with the Better Business Bureau.

Flagstar Mortgage currently offers financial products to virtually every state in the United States. To find a listing of the available mortgage officers in your area, you can use their convenient loan office Flagstar search tool on their website.

Flagstar Mortgage – Loan Process Explained

Learn about Their Loan Program Types

The first step to take in the loan process at Flagstar Mortgage is to familiarize yourself with the different types of loan programs that they offer. For many first time home buyers, you will likely want to stick with their FHA mortgages. These loans have flexible credit requirements. Moreover, they only require a minimum down payment amount of 3.5 percent. For a 30-year fixed rate on this type of mortgage, the standard rate is around 3.75 percent.

For those of you who have served in the military or are currently active duty, VA loans may be the better option. These types of loans have the advantage of not having a down payment requirement. In addition, they also typically have lower credit requirements and do not require PMI. Instead, they charge a funding fee that is a percentage of the loan amount at closing. The average interest rate for this loan is also 3.75 percent.

Flagstar Mortgage also offers a loan program type know as a Rural Housing loan. Otherwise known as USDA loans, these mortgages are designed to encourage growth in rural areas. To qualify, the subject property must be located in an approved area. Similar to VA loans, these loan types do not require a down payment and charge a funding fee instead of PMI. With these types of mortgages, the interest rate can vary slightly based on current program standards.

For borrowers that have purchased a home in the past, you will likely stick with their prime mortgage offerings. These loans are also known as conforming loans and have stricter credit requirements. They also have a slightly higher down payment amount than FHA loans with an average requirement of ten percent. The average rate for these types of mortgages is approximately 4.126 percent.

Advantages and Disadvantages of Fixed and ARMs

With most of the loan programs above, you can easily qualify for either a fixed or adjustable rate mortgage, otherwise known as an ARM. Each of these choices has distinct advantages and disadvantages. You should be aware of them before making a final decision.

By far, the most popular choice is fixed-rate mortgage types.

With these loans, the interest rate is set at closing and remains stable for the duration of the loan. These loans are much easier to budget for in the long-term. They are a great way to lock in low rates when the market is working in your favor. Unfortunately, it’s possible to get stuck at a higher rate if market conditions continue to result in lower rates. The stability factor is the primary reason most borrowers decide to stick with this choice.

With adjustable rate mortgages, you receive a much lower introductory rate amount for a given period. This period can vary with common lengths being three, five, seven, and ten years. After this period ends, the rate will adjust annually to reflect the current prevailing rate based on current market conditions.

The main benefit of these loans is that they offer borrowers a much cheaper payment during the early years of the loan. This can be very beneficial for borrowers who are looking to spend money on upgrades and repairs for their property. Such loans are also very popular during periods when rates are likely to drop in the future. This allows homeowners to save without having to refinance their property.

However, these rate changes can result in higher payments if the rate rises instead. That is the biggest downside with these types of loans.

Prequalification

Now that you have a bit of background knowledge, you should be ready to move onto the prequalification. The prequalification stage involves estimating how big a house you can afford by contacting Flagstar Mortgage. They will ask for a breakdown of how much money you make each month to determine your ideal mortgage limit. The company will also generally pull a credit check to get an idea what range your credit score falls into.

Once they have decided on the mortgage amount that you can likely afford, they will give you a prequalification letter to provide to your real estate agent. Using this letter, you and your broker can begin looking for properties. Your prequalification will show that you are a serious buyer who is already in touch with a mortgage company.

Underwriting and Closing

young couple receives keys to a new home from a real estate agent

At this stage, you should likely have a property that you are interested in. If all goes well, you will make an offer on the home, and the seller will accept. Once this happens, the loan process proceeds to the underwriting step.

During this stage, it is extremely important to watch your credit utilization and maintain your financial standing. The mortgage company will perform another credit check and will ask for fresh income documentation from you. They will also verify your employment and ask for additional documents relating to the subject property. Some prime examples include home inspection reports, insurance estimates, and appraisals.

If everything checks out, your loan should be approved within two weeks. The mortgage company will check to make sure it meets the requirements of your given loan program. Once this is all complete, you will close on the loan and receive your keys as well as your payment remittance information. Using this information, you can create an account on the Flagstar Mortgage website to manage your mortgage payments electronically.

PROs and CONs of Flagstar Mortgage

Pros

  • Available in virtually every state.
  • A wide variety of educational tools online.
  • Able to manage your payments and view documents online.

Cons

  • Lacks a full online application method.

Flagstar Mortgage Customer Service Review

Overall, the customer service at Flagstar Mortgage is excellent. They work with their clients to quickly answer their questions and offer a variety of online educational resources. In addition to telephone support, you can also email them for answers to more basic financial questions.

Contact Information

Overall, Flagstar Mortgage is a great choice for both new homebuyers as well as more established individuals. They offer a broad range of educational resources and work with their customers to answer their questions quickly. If you have experience with Flagstar Mortgage, feel free to tell us about it in the comments section.

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