Is Flagstar Bank An Expensive Mortgage Lender?

We compare mortgage interest rate and loan related closing costs at Flagstar Bank with other lenders for mortgages with similar borrower characteristics:

Interest Rate: similar to average (-0.04%)
Loan Related Closing Costs: similar to average (-$178)
Assessment: this lender tends to be a cheap lender.

This scoreboard is based on data reported to FFIEC. In the data, Flagstar Bank originated 67221 mortgages, a national market share of 1.1%. It was most active in MI (3.0% market share), MT (2.4% market share), and CA (1.9% market share).

On average, Flagstar Bank’s interest rates were similar to those of comparable mortgages at other lenders (-0.04%).1The comparable mortgages control for Flagstar Bank’s distribution of loan term (e.g. 30 year vs 15 year), loan-to-value (LTV), debt-to-income (DTI), loan amount, loan program (e.g. Conforming/FHA), loan purpose (e.g. purchase/refinance), and county. Interest rate and loan related closing costs are estimated based on fixed rate mortgages only, whereas market shares include all purchase or refinance mortgages. Its average total loan related closing cost was $5289, which was similar to those of comparable mortgages at $5467, with a difference of -$178. Overall, we estimate that Flagstar Bank tends to be an cheap lender, with a cost-adjusted-rate difference of -0.06% compared to comparable mortgages at other lenders.2Cost adjusted rates were computed based on each percent of the loan amount in loan related closing costs being worth 1/6 of a percentage point in interest rate. Nevertheless, we recommend comparing your rate and fees with at least a few other lenders before signing with Flagstar Bank.

Flagstar Bank originated Conforming, FHA, Jumbo, USDA and VA mortgages for new home purchases. It also originated Conforming, FHA, Jumbo and VA mortgages for refinances. We breakdown its interest rate and total loan related closing cost on by each of the mortgage types it originated below:

Home Purchase Mortgages from Flagstar Bank compared to other lenders

Conforming FHA Jumbo USDA VA
Interest Rate Difference -0.02% -0.10% +0.12% -0.04% -0.04%
Loan related Closing Cost Difference -$14 -$498 +$381 +$42 -$110
Cost Adjusted Rate Difference -0.02% -0.15% +0.13% -0.04% -0.05%

Based on the table above, Flagstar Bank is cheap for FHA and VA purchase mortgages. It is similar to other lenders for Conforming and USDA purchase mortgages. It is more expensive than other lenders for Jumbo purchase mortgages.

Mortgage Refinancing from Flagstar Bank compared to other lenders

Conforming FHA Jumbo VA
Interest Rate Difference -0.03% -0.08% +0.01% -0.10%
Loan Related Closing Cost Difference -$331 -$31 -$675 -$269
Cost Adjusted Rate Difference -0.05% -0.08% -0.00% -0.12%

Based on the table above, Flagstar Bank is cheap for Conforming, FHA and VA mortgage refinance. It is similar to other lenders for Jumbo mortgage refinance.

Other information about Flagstar Bank:

Regulator: Consumer Financial Protection Bureau (CFPB) 
Top holder: MP (THRIFT) LLC
Registered city and state: Troy, MI, 48098

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Footnotes   [ + ]

1. The comparable mortgages control for Flagstar Bank’s distribution of loan term (e.g. 30 year vs 15 year), loan-to-value (LTV), debt-to-income (DTI), loan amount, loan program (e.g. Conforming/FHA), loan purpose (e.g. purchase/refinance), and county. Interest rate and loan related closing costs are estimated based on fixed rate mortgages only, whereas market shares include all purchase or refinance mortgages.
2. Cost adjusted rates were computed based on each percent of the loan amount in loan related closing costs being worth 1/6 of a percentage point in interest rate.