Home Equity Loan (HELOAN)

A home equity loan uses the equity in your home as collateral. (Equity is the home’s value after subtracting the mortgage balance and any other debts that use the home as collateral.)
 
You can apply for a specific loan amount or ask one of our experienced bankers to help you find the maximum amount to apply for. The total amount of the home equity loan and your mortgage balance can be up to 89.99% of the home’s value.
 
The loan approval and amount are based on income, debt, credit history, home equity, and other factors.
 
Once the loan is approved, you’ll receive the entire amount at once. You can use the funds however you’d like. Many of our customers use their home equity loans to pay for home renovation, weddings, supporting a new child, school, emergencies, and other significant expenses.
 
HELOANs have a fixed interest rate, so you’ll make the same monthly payment until the loan is repaid.

There are no rules that dictate how to use your home equity loan, but many people apply for a HELOAN to pay for large expenses like these:

• Remodel and renovate—Bring your home to life with a sparkling new kitchen, bigger bathroom, home gym, professional landscaping, or technology upgrades.
• Home maintenance—Keep the bones of your house in good shape with a new roof, energy-efficient furnace, updated windows, and modern plumbing.
• Debt consolidation—Potentially lower your monthly bills and boost your credit score by paying off high-interest credit cards, medical bills, and other debt.
• Emergencies—Cover your expenses during a major life event so you can focus on what’s important.

There are a few significant differences between HELOANs and HELOCs:

• The funds
  A home equity loan gives you the entire loan amount as a lump sum.
  A home equity line of credit lets you draw funds as needed.
• The interest rate
  A home equity loan has a fixed interest rate with predictable monthly payments.
  A HELOC has a variable interest rate based on Wall Street Journal prime rate, so the monthly payment can fluctuate.
• The payment period
  A home equity loan can be for 10, 15, or 20 years.
  A HELOC has a 10-year draw period and a 20-year repayment period. During the draw period, you can make payments on interest only or interest and principal.

There are several ways to keep costs down on a home equity loan:

• Receive a 0.25% interest rate discount by setting up automatic monthly payments from a Flagstar checking or savings account when you apply for the loan.
• The interest on your loan may be tax-deductible. Ask your tax advisor if that’s the case for your specific situation.

You have several convenient ways to make payments on your HELOAN:

• Sign up for MyLoans to set up automatic payments.
• Pay at a nearby Flagstar branch. Find the closest branch to you here.
• Pay by phone at (866) 837-4539. You may have to pay a convenience fee for this option.
• Mail a check to the address below. Please put your loan number in the memo section.
  
  Flagstar Bank

  P.O. Box 660263

  Dallas, TX 75266-0263

Yes. You need to have equity in your home to apply for a HELOAN, but you don’t need a mortgage.

Your HELOAN uses your home equity as collateral. When you sell your home, you’ll need to pay back the loan before or during closing. It’s common for people to use the proceeds from the sale to pay off their HELOAN at closing.