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Loan & Mortgage FAQs

Home loan questions

Your best option is a home loan conditional approval — an evaluation of your credit worthiness based on your income, assets, debts and past credit use. To obtain your home loan conditional approval today, apply now with our quick and easy online application. If you have other home loan questions, call a Flagstar loan advisor at 844-528-1286 or visit your local branch.

Credit reports

Along with your income, assets, and debts, your history of credit management is an important factor when applying for a home loan. Three national credit reporting agencies continuously monitor your use and re-payment of credit, including credit cards, car loans, student loans, and any other short- or long-term loan. Make sure you know what's in your credit reports so you can correct any errors.

 

All three agencies report the following information:

  • Identification: name, address, Social Security Number, employer, date of birth, and spouse's name
  • Credit history: current and past payment history of all open and paid accounts. Negative information, such as late payments, can stay on your report for seven years, while bankruptcies can remain for up to 10 years
  • Collection: any creditor who has turned over an account to a collection agency may be listed
  • Public records: items of public record that affect your finances, such as bankruptcies, divorce decrees, child support, and other judgments are listed
  • Inquiries: anyone who has checked your credit in the past 18-24 months is listed

You can order your credit report (usually for free) or dispute information that it contains by contacting the agencies listed below:

 

Equifax
PO Box 740241 Atlanta, Georgia 30374
800-685-1111
equifax.com

 

TransUnion
PO Box 390 Springfield, Pennsylvania 19064
800-888-4213 
transunion.com

 

Experian
PO Box 949 Allen, Texas 75013
800-422-4879
experian.com

Finding the right home loan

Flagstar offers a wide array of great loan programs tailored to fit your individual needs in either a fixed-rate mortgage or an adjustable-rate mortgage (ARM). Some of the home loan products we offer include:

  • 10-, 15-, 20-, 25- or 30-year fixed-rate loan terms
  • 3-, 5-, 7- or 10-year adjustable-rate loan terms (up to $510,400)
  • 3- or 5-year jumbo adjustable-rate loan terms (over $510,400)
  • First-time homebuyer home loan programs

Have more home loan questions? Browse types of home loans.

We'll help you choose the best home loan for your needs based upon three key factors:

  • How long do you plan to keep your home?
  • How much you need to borrow?
  • How much financial risk are you willing to accept?

To learn more about the wide variety of home loan products that Flagstar offers or for any other home loan questions, you can speak directly with a home loan advisor at 855-908-2388

Down payments

The most important factor in determining the size of your down payment is the amount of cash immediately available to you. Most home loan programs have minimum down payment requirements based on the amount you need to borrow compared to the actual value of the home. This amount is commonly known as the loan-to-value ratio or LTV for short.

 

You can calculate the LTV by dividing the loan amount by the appraised value. The bigger your down payment, the lower your LTV. For example, if you bought your home for $200,000 and put $50,000 down, your LTV would be 75% (150,000/200,000). A low LTV not only gives you a better chance of a home loan approval, it also can affect the interest rate of your home loan, thus lowering your monthly mortgage payment. For more mortgage FAQs, visit our guide to the home loan process.

Interest rates

An interest rate is the monthly cost you pay on the unpaid balance of your home loan. An annual percentage rate (APR) includes both your interest rate and any additional costs or prepaid finance charges such as points, origination fees, private mortgage insurance, and underwriting and processing fees (your actual fees may not include all of the items above). The APR is a universal measurement that will help you compare the cost of mortgage loans offered by different mortgage lenders.

A fixed-rate mortgage is a loan in which the principal and interest payments never change during the life of the loan. Fixed-rate mortgages are beneficial to borrowers who are on a fixed income, who are averse to interest rate changes, and who like the security of fixed payments.

 

Adjustable-rate mortgages are generally preferred by borrowers who do not plan to stay in their home for a long time, who do not qualify for lower fixed interest rates and/or who can handle fluctuating payments.

 

To find out what interest rates are available to you or for other home loan questions, call a Flagstar loan advisor at (844) 810-2209.

 

Home loan insurance

Homeowner's insurance protects your property against disaster and liability. This insurance protects you and the lender's investment in your property. You are required to be insured against unexpected hazards and personal liability claims. Prepayment of the first year's homeowner's insurance will be part of your closing costs. Your ongoing insurance premiums will become part of your monthly mortgage payment.

There are hazards for which an investor or bank may require coverage that is not included on traditional homeowner's policies. These hazards include, but are not limited to, windstorms, hail damage, or hurricanes. There are coastal areas, primarily the Eastern seaboard and Gulf Coast, where certain hazards are excluded as standard coverage. If the homeowner's insurance policy limits or excludes any hazards such as windstorms, hail, or hurricanes, then a separate policy covering these natural disasters must be provided.

Flood insurance is specific insurance coverage that protects against property loss from flooding. A flood certificate is obtained during the loan approval process to determine whether or not the property being purchased or refinanced is located in a special flood hazard area.

 

Coverage must be equal to the lesser of:

  • The unpaid principal balance
  • Replacement cost of the property
  • $250,000 (the maximum coverage available under the National Flood Insurance Program)

Private mortgage insurance (PMI), also known as a mortgage insurance premium (MIP), protects lenders against the possibility of default. You may be billed monthly, annually, as an initial lump sum, or some combination of these methods for your mortgage insurance premium. Ask your Flagstar loan advisor if mortgage insurance is required and how much it will cost. Mortgage insurance protects the lender where the borrower is not able to provide a 20% down payment. This insurance should not be confused with products such as mortgage life, credit life, or disability insurance, which are designed to pay off a mortgage in the event of a borrower's death or disability.

Lenders often require mortgage insurance for loans when the down payment is less than 20% of the sales price.

Unfortunately, no. At this time, the government is only allowing tax deductible PMI for purchases and refinances that closed in the 2007 tax year.

Home inspection

A home inspection is not an appraisal. It is an evaluation of the general quality of the home with details about the structural condition of the house and the life expectancy of its major systems, such as plumbing, heating, and electrical. The inspection will tell you whether your new home is free from defects that could cause problems both now and in the future.

 

A home inspection is generally a contingency in the purchase agreement. You have a set amount of time for a professional inspector to examine the house, and if any major issues are found, you can use them in price negotiations.

Closing on your home loan

Closing costs typically total between two and five percent of the purchase price of the home. These mostly one-time fees include:

  • Appraisal
  • Title insurance
  • Closing transaction fee
  • Loan origination fee
  • Discount points
  • Recording fee
  • Underwriting fee
  • Processing fee

Prepaids refer to fees you will owe to cover costs such as property tax, homeowner's insurance, and pro-rated interest. The lender collects these fees to ensure your taxes and insurance are paid on time. 

The day you close represents the culmination of your efforts and those of your loan advisor to complete the financing of your home. You want the closing to be as smooth and stress-free as possible, so be sure to resolve any home loan questions before closing.

 

To close your loan, you'll need to bring certified funds totalling the down payment, closing costs, and prepaid items. The total amount of funds you'll need will be provided to you at least 3 business days before your scheduled closing date in the form of a closing disclosure, commonly referred to as a CD. The closing disclosure is a key part of the closing and identifies the different fees and charges associated with the loan, as well as mortgage terms and payment information. The final closing disclosure will be included in the package you are presented with at time of settlement.

 

Sign all the applicable documents. When you're finished, you'll receive a copy of every document and the keys to your new house.

Refinancing

Yes. If your mortgage payment is due before your new mortgage loan closes, you should still make any pending mortgage payments. It is important that payments are made on time to maintain your credit rating.

When refinancing your home, the LTV is the appraised value compared to the loan amount. For example, if your home appraises for $100,000 and your loan amount is $80,000, your LTV would be 80 percent (80,000/100,000). When purchasing a new home, the LTV is the loan amount divided by the lesser of appraised value or the purchase price. 

Escrow

An escrow account holds money you pay to the mortgage company to cover your taxes, insurance, and other costs associated with homeownership. The funds are included in your monthly mortgage payment, making budgeting easier for these expenses. The mortgage company is responsible for the timely disbursement of escrow funds.

Flagstar will consider requests for a waiver of taxes and homeowner insurance. We will evaluate the request during the credit review and approve the escrow waiver prior to closing if all requirements are met. Borrowers with an escrow waiver are responsible for paying all taxes and homeowner insurance premiums when they are due.

Monthly payments

Yes, you can make an online payment through Flagstar's MyLoans application.  MyLoans simplifies the mortgage payment process and makes it easy for you to automatically schedule future and recurring payments directly from your checking account. 

MyLoans is a simple way for you to manage your Flagstar loan(s) online, and it's always available when you need it — 24 hours a day, seven days a week from anywhere you have Internet access.

 

It's free, easy-to-use, and it allows you to:

  • View your loan balance, interest rate, and payment due date
  • View your year-to-date interest and year-to-date taxes
  • Instantly access your monthly statements online
  • Simplify tax time. View yearly 1098 tax statements online (available during tax season)
  • Pay your loan online and take the hassle and expense out of writing and mailing checks

No, we do not accept credit card payments.

No, we are unable to change your due date based on the contract/note that was signed at closing.

Mortgage payment relief

No. There are many options available to help you avoid foreclosure. For details visit our Mortgage Payment Relief page or call our loss mitigation department at 800-393-4887, Monday-Friday 8:30 a.m. – 7 p.m. ET to discuss your situation with one of our loan counselors. Flagstar wants to help.

No. If you are unable to continue making your payment, selling your home for its current fair market value is often the best way to avoid foreclosure. Our loss mitigation specialists can help you navigate through the short sale process.

It depends on your overall situation. To the extent you are able to honor your obligation, we will expect you to do so and will work with you to make this as easy as possible.

We will need to see information that verifies your financial hardship. This might include lay off notices or other notices from your employer concerning your rate of pay or a reduction in hours, tax returns, medical bills, and/or other information that documents your financial hardship. We may also need to see recent bank statements, a listing of what you own and what you owe, and information on your household budget. We can work with you to assemble this information.

Absolutely. Please give us a call at 800-393-4887, Monday-Friday 8:30 a.m. – 7 p.m. ET and we'll answer all your questions.

We are required to report the status of your loan each month to the credit repositories and will continue to do so during the relief period. However, the damage to your credit report from using one of our relief options is far less than it would be if your home were to go to foreclosure. Also, creditors may look more favorable on future credit applications if you can show that you cooperated with your lender during a time of financial hardship.

Until a formal arrangement is made to bring your account current, the normal loan servicing process will continue, including phone calls and letters from our loan counseling department.

With a short sale, the IRS generally does not count debt forgiveness as income if the debt was secured by your primary residence. However, exceptions to this do exist and you should consult your tax advisor for more details.

There are many credit counseling agencies available that can help you work with your credit card lenders and other creditors to reduce your payments. Many credit counselors offer assistance with budgeting and may also have information on other financial assistance available in your area from state and local government agencies, churches, and other civic organizations. Contact the U.S. Department of Housing and Urban Development toll free at 800-569-4287 to find out how to contact credit counselors in your area. Or visit their website at www.hud.gov and look for information on how to avoid foreclosure.

In some cases, this may be possible. There is usually a fee for doing this, but it can be a way to reinstate your loan depending on what your investor allows.

If you are currently in foreclosure, there may still be time to save your home. The only way to determine what, if any, options are still available is to contact:

Loss Mitigation Department at 800-393-4887, Monday-Friday 8:30 a.m. – 7 p.m. ET.

Glossary

We understand that it may feel like you are drowning in alphabet soup with mortgage acronyms and finance language that may seem foreign to you. We’re here to help. Below are common acronyms used in the mortgage process. You can always contact a Home Loan Advisor to learn more.

 

APR – Annual Percentage Rate is the annual cost for obtaining a loan expressed as a percentage, it is usually higher than the interest rate because it includes the interest rate, points, mortgage origination fees and other costs charged to the borrower.

 

CD – A Closing Disclosure form provides final details about the mortgage loan, including terms, monthly payments, fees, and other closing costs.

 

Closing Costs – These are fees paid by buyers, sellers, and homeowners refinancing a current mortgage in order to complete a real estate transaction. Closing costs include title insurance, taxes, discount points, appraisal fees, lender-imposed fees, prepaid-interest, and other costs.

 

CTC – Clear To Close means the underwriter has reviewed and approved all documentation necessary, deeming that the loan is ready to close.

 

Down Payment – A down payment is an amount the homebuyer pays to make up the difference between the total purchase price of the house and the mortgage amount. The typical down payment on a house can vary.

 

DTI – Debt-To-Income ratio is a calculation used to determine whether the percentage of monthly debt, including the new mortgage payment, exceeds a certain percentage of the borrower’s monthly gross income.

 

Escrow – A mortgage lender can hold a portion of the borrower’s monthly mortgage payment in escrow to pay property taxes and insurance. Each month, you pay a portion of the estimated annual costs along with your principal and interest.

 

Escrow Agent – A neutral third-party that acts as the custodian for the loan documents and funds during the completion of a mortgage transaction.

 

Fixed vs. Variable – Fixed-rate financing means the interest rate on a loan does not change over the life of the loan. Whereas with a variable-rate loan, the interest can change as the index rate changes, meaning it may increase or decrease.

 

LE – A Loan Estimate provides important details about the loan a borrower selected, including the estimated interest rate, monthly payment and total closing costs for the loan.

 

LTV – Loan-to-Value is the ratio between the outstanding mortgage amount as a percentage of a property’s appraised value. A loan-to-value ratio is one factor a lender considers when deciding whether or not to approve a particular mortgage transaction.

 

PITI – Short for Principal & Interest, Taxes and (property) Insurance components of a monthly mortgage payment. PITI may also include monthly mortgage insurance (MI) or homeowner’s association (HOA) dues.

 

PMI – Private Mortgage Insurance is generally required when a borrower takes out a conventional mortgage with a down payment of 20% or less.

 

Rate Lock – A mortgage lender’s promise to have that rate available through a specific period of time. For example, a rate lock may be for 30, 45, or 60 days. Longer rate locks may be available and there may be a fee. It’s not a guarantee the borrower will get approved.

 

Right of Rescission – Generally, a borrower has the right to rescind, or cancel, a non-purchase mortgage transaction on their principal residence within three business days of closing. Some exceptions apply.

 

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