Flagstar Bank: 2024 Home Equity Review

Benefits

• Whether you need a HELOC or home equity loan, Flagstar Bank offers line or loans from as little as $10,000 up to $1 million.
• There are no closing costs for the bank’s home equity loan product and no prepayment penalties. The bank doesn’t charge closing costs on HELOCs, either, but you might be on the hook for a prorated portion if you pay off and close the line early (within three years).

Drawbacks

• You can start an application for a home equity product online, but to complete the process, you’ll need to speak with a loan specialist over the phone or visit a branch.
• The bank has branches in only five states, so if you want in-person service, your options might be limited.

Home equity loan products offered

Flagstar Bank offers both home equity lines of credit (HELOCs) and home equity loans, in amounts as little as $10,000 up to $1 million. If you’re interested in a fixed interest rate and a lump-sum payment, a home equity loan might be right for you. The repayment terms on a home equity loan are 10, 15 or 20 years.

If you’d rather have a revolving line of credit that you can access whenever you need, a HELOC might be a better choice. Flagstar’s HELOC comes with an introductory period with a lower rate (first six billing cycles), a 10-year draw period and a 20-year repayment term. There is no minimum draw amount for a standard HELOC. The bank offers interest-only payments during the draw period, but there’s a minimum monthly payment of $100.

Types of fees charged

There are no closing costs on HELOCs with Flagstar Bank (other than government taxes and fees), but you’ll need to pay a prorated portion if you close the account within three years. All HELOCs come with a $75 annual fee, which is waived for the first year.

Both the HELOC and home equity loan from Flagstar come with automatic payment discounts: 0.5 percent for HELOCs and 0.25 percent for home equity loans.

How to qualify for a home equity loan with Flagstar Bank

To be eligible for a home equity product from Flagstar Bank, you’ll need a credit score of at least 680. The property you’d like to use to secure your HELOC must be your residential home, which can include one- to four-unit owner-occupied properties and modular homes. To maintain the loan or HELOC, you’re required to have homeowners insurance and, in some cases, flood insurance.

How to apply with Flagstar Bank

To apply for a home equity product with Flagstar Bank, you can visit a local branch, call the bank or begin the process online.

If you have questions about a HELOC, you can call 855-372-5626, Monday through Thursday from 8 a.m. to 10 p.m. ET, Friday from 8 a.m. to 8 p.m. ET or Saturday from 10 a.m. to 5 p.m. ET. For questions about a home equity loan, you can call 888-248-6423 Monday through Friday from 7:30 a.m. to 9 p.m. ET and Saturday from 8:30 a.m. to 6 p.m. ET.

How Bankrate scored Flagstar Bank

• Methodology

  To determine a home equity lender's Bankrate Score, Bankrate rates lenders on a scale of one (1) to five (5) stars — with five (5) the highest rating — based on a variety of factors relating to the lender's products and services. To assign our ratings, we assessed each mortgage lender across three core areas:

  • Affordability: Annual percentage rate (APR) - 80%; introductory APR - 20%
  • Availability: Licensing - 50%; credit score - 20%; loan minimum - 10%; draw requirement - 10%; loan products - 10% 
  • Borrower experience: Rate transparency - 45%; convenience - 35%; customer service - 10%; fixed-rate options - 10%

  Learn more about our methodology.