Flagstar Bank: Review on Home Equity Loans and HELOCs

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Good for 24-hour customer support
Flagstar Bank
Flagstar Bank
Good for 24-hour customer support
Flagstar Bank
  • Products offered:
    Home equity loan (in some areas), HELOC, interest-only HELOC
  • Home equity loan terms:
    10, 15, or 20 years
  • HELOC terms:
    10-year draw period, 20-year repayment period
  • Maximum LTV:

NextAdvisor’s Take

  • Available in 49 states
  • Accessible customer service, including 24-hour phone support
  • Flexible product offerings
  • No online application (can only request a phone call)
  • Unable to get personalized rate quote through website
The Bottom Line

Flagstar Bank has the highest nationwide availability yet, offering home equity loans and HELOCs in 49 states (all but Texas). Though both products are offered in 49 states, the availability of home equity loans may be limited depending on your area. Available loan amounts for home equity loans and HELOCs are $10,000 to $1,000,000.

HELOCs with Flagstar require a $75 annual fee, but it is waived the first year. To avoid closing fees, you’ll have to keep your HELOC open for at least 36 months. Additionally, there is a 0.50% rate discount for borrowers who have monthly automatic payments set up from a Flagstar Bank deposit account.

Flagstar doesn’t have a full online application, only a form where you can submit your information to be contacted by a representative later.  Flagstar does not provide rates on its website, you can get a custom rate based on a soft credit check and some additional information. 

While its nationwide availability for HELOCs is strong, Flagstar’s tedious application process and lack of transparency may be frustrating for customers seeking a quick, easy process. The lender does offer several customer service options, including 24-hour loan support via phone, so this may be appealing to those who enjoy accessible communication with customer service. 

Flagstar Bank Full Review

Headquartered in Troy, Michigan, Flagstar Bank offers home equity lines of credit (HELOCs) in 49 states across the country. Flagstar also offers home equity loans, though locations are more limited. Home equity loan and HELOC amounts go up to $1,000,000. To get one, you’ll need to speak with a customer service representative over the phone or in person at one of Flagstar’s 158 branches.

Flagstar Bank: Home Equity Loan Products

Flagstar offers HELOCs in 49 states, as well as home equity loans in some areas. Loan amounts range from $10,000 to $1,000,000, and you can have a maximum loan-to-value (LTV) ratio of 80%.

If you opt for a home equity loan, you can select repayment terms of 10, 15, or 20 years. HELOCs, on the other hand, come with a 10-year draw period and 20-year repayment term. 

Flagstar also offers interest-only HELOCs, allowing you to pay interest charges only during your draw period. Once the draw period ends, you’ll start paying back both interest and the principal balance. 

If you borrow a HELOC from Flagstar, you’ll pay no fee the first year and a $75 annual fee after that. The bank also waives closing costs as long as you keep your HELOC open for a minimum of 36 months. 

As for rate discounts, Flagstar Bank will lower your rate by 0.50 percentage points if you set up automatic payments from a Flagstar deposit account. 

Flagstar Bank: Home Loans Rate and Fee Transparency

Flagstar made our list of the best HELOC lenders thanks to its wide availability and accessible customer service. But while the bank is fairly transparent about fees, it does not offer an online application process. 

To apply with Flagstar, you’ll have to fill out a form with your contact information and wait for a call back from customer service. A customer service representative can provide a custom rate based on a soft credit pull and some information, but you’ll need to submit a full application and consent to a hard credit inquiry to see your final offer and lock in a loan. 

Some other HELOC lenders let you check your rates online quickly and easily through prequalification. This option makes it easy for borrowers to compare offers and find an affordable loan. 

If you prefer to complete the process over the phone instead of online, Flagstar Bank could be a good fit. But if you’d rather do your loan shopping online, you might look to alternative lenders that provide this option. 

Flagstar Bank Compared to Other Home Equity Lenders

Flagstar BankPNC BankU.S. Bank
HELOC HELOC, Interest-only HELOC Fixed rate HELOC, variable rate HELOC Variable rate HELOC
Home Equity Loan Yes, with terms of 10, 15, or 20 yearsNoYes
States Available49 states (home equity loans are more limited) 44 states (not available in Alaska, Hawaii, Louisiana, Nevada, Mississippi, South Dakota)45 states (home equity loans not available in Hawaii, Louisiana, New York, Oklahoma and Rhode Island)​​
Loan Amount Range$10,000 – $1,000,000$10,000 – $1 million$15,000 – $750,000 (up to $1,000,000 for properties in California)
HELOC Loan Terms10-year draw period, 20-year repayment period Repayment period of 5 – 30 years (5 – 20 years in Tennessee)10-year draw period; repayment period unspecified
Max LTV80%89.9% (80% or 85% in some states)80%

How to Get the Best Home Equity or HELOC Rate  

If you’re on the hunt for a home equity loan or HELOC, these tips can help you find the best rate. 

Compare Products Offered 

As you start searching for a loan, make sure you understand the difference between a home equity loan and a HELOC. A home equity loan offers a lump sum upfront that you pay off in monthly installments over time. Home equity loans typically have fixed interest rates, although some lenders, like Third Federal, offer 5/1 loans that have a fixed rate for five years followed by an adjustable rate. 

HELOCs, on the other hand, often come with variable rates, though some lenders give you the option of locking in a fixed rate during your draw period. You can draw on a HELOC as needed and pay it off as you go. A HELOC might be a better option for a project with variable costs, whereas a home equity loan could be preferable if you know the exact amount you need. 

Some lenders offer both home equity loans and HELOCs, whereas others offer only or the other. By deciding which product you want, you can start to narrow down your list of prospective lenders. 

Shop for Multiple Lenders 

Before borrowing a loan, it’s always a good idea to shop around with multiple lenders. Rates and fees vary by lender, so comparing your options can help you find a loan or HELOC with the best terms. 

Some lenders let you check your rates online with no impact on your credit score. This option to prequalify lets you check your custom rates with no obligation to borrow. 

Estimate Long-Term Costs 

Once you’ve prequalified with some lenders, do the math with an online loan calculator. A loan calculator can reveal your monthly payments and long-term interest charges. 

You might also check your amortization schedule to see how much of your monthly payment will go toward interest charges vs. your principal balance over time. 

Remember that a loan with the lowest interest rate might not necessarily be the most affordable if it comes with hefty fees. 

By using a calculator, you can see exactly what your repayment obligations will look like and make sure they fit your budget. 

Only Borrow What You Need 

When borrowing a home equity loan or HELOC, be careful not to borrow more than you need. Some lenders allow an LTV ratio of 80% or 90%, but that doesn’t mean you need to max it out. 

Over-borrowing against the equity of your home is risky, since you could end up in foreclosure if you can’t afford to pay back your loan or HELOC. 

If your home value drops too much, you could end up underwater, or owing more on your home than it’s worth. 

Improve Your Credit Score

Borrowers with the best credit scores tend to get the lowest rates on home equity loans and HELOCs. Before you start the loan shopping process, take some time to check your credit score

You can check your score for free from Experian or Equifax or purchase it from myFICO.com. You can also order a free copy of your credit report from AnnualCreditReport.com and review it for any negative marks or reporting errors. 

If you don’t have an immediate need for a loan, consider taking some time to improve your credit before you apply. Making on-time payments on loans, reducing your credit utilization ratio, and paying down debts are a few steps you can take to boost your credit.