Mr. Cooper Mortgage Review: Get To Know This Home Loan Servicer
These days, people can finance their home purchase or renovation at the touch of a button. With non-bank lenders like Mr. Cooper, all you have to do is log into the website, fill out your personal details, and close the deal within a few weeks.
But can you really trust an online, non-bank lender like Mr. Cooper? Before you sign a contract with this company, it's best to learn everything you can about its loan products, reputation, history, and more.
In this Cooper mortgage review, we'll break down the type of loans this lender offers. We'll also review its application process, fees, and customer service to see if it’s the right company to finance your home.
What To Look For In A Mortgage Lender
Before moving forward, let's discuss some of the aspects we look at whenever we write reviews on a mortgage lender.
Available Loan Types
The best mortgage companies offer a wide selection of home loan types. In general, they should offer both conventional and government-insured loan products, as well as mortgages for home purchases, renovation, and refinancing.
Most mortgage lenders offer people a choice between the following:
Fixed-rate mortgages: These loans have a consistent rate. Because of that, monthly payments stay fixed throughout the life of the loan.
Adjustable-rate mortgages: These loans have an interest rate that's fixed for a certain period. Then, the rate is adjusted annually based on market conditions.
Mortgage Rates And Fees
The best mortgage lenders offer a modest interest rate. This helps ensure that the borrower pays the lowest amount possible for their home loan.
When we write reviews, we also check a mortgage company's closing costs, origination fees, and application fees. This is because a lender may offer low rates but charge high fees.
One of the toughest parts about getting a home loan is the application process, but the best mortgage companies make it quick and easy.
When we write reviews on a mortgage company, we check the following:
Does the lender have a convenient online system?
Are there tools on the lender's website that help people get customized quotes?
Can a mortgage deal be closed online?
Can people check mortgage rates online?
Is the application process transparent?
Before signing a contract with any business, it's best to first check if it has a good reputation with its customers. When we write reviews on lenders, we check complaints that customers have filed with the Better Business Bureau. We also check if the lenders have had any issues with the Consumer Financial Protection Bureau.
Mr. Cooper Mortgage Review
Formerly known as Nationstar Mortgage LLC, Mr. Cooper is a non-traditional lender that has a small range of mortgage products. The company also acquired another lender, Pacific Union Financial, in 2019.
Here is our assessment of Mr. Cooper’s mortgage products:
Available Loan Types
While Mr. Cooper doesn't offer the most extensive range of home loan options, you'll find most of the basics. For example, the lender offers conventional and government-backed loans for purchase and refinancing. You can also select from fixed-rate and adjustable-rate term options.
Here's a closer look at the mortgage products you can get from Mr. Cooper:
Conventional loans refer to mortgages that are not insured by the federal government. They're attractive because they come with less paperwork and can be closed faster compared to government-backed mortgage products.
Due to the nature of conventional loans, they come with stricter credit score requirements as well as a 5% minimum down payment. Other features of conventional loans from Mr. Cooper include the following:
You can choose from 15- or 30-year fixed or adjustable-rate term options.
There is a maximum loan amount of $510,400.
If borrowers cannot make a down payment of at least 20%, they will need to pay for mortgage insurance and contribute to an escrow account every month.
If your credit score makes it difficult for you to qualify for conventional loans, then an FHA loan from Mr. Cooper may be a good option to consider. FHA loans are guaranteed by the Federal Housing Administration, so they come with more flexible credit requirements.
For instance, the minimum credit score for FHA loans is 580 and the minimum down payment is 3.5%. Mr. Cooper also does manual underwriting to check alternative credit data.
Keep in mind, though, that borrowers who take out FHA loans may be required to pay upfront and monthly mortgage insurance.
FHA Streamline Loan
Unlike most mortgage lenders, Mr. Cooper offers FHA Streamline Loans – a refinancing option that's exclusively available to borrowers who already have an FHA loan.
One advantage of getting an FHA Streamline Loan from Mr. Cooper is that the required paperwork is less tedious compared to other refinancing options. This makes the process quicker and simpler.
Mr. Cooper offers VA loans, which are available to active service members, as well as honorably discharged veterans and their surviving spouses. Compared to conventional and FHA loans, VA loans feature lower interest rates and come with 0% down payment options. People who are looking to get a VA loan must have a FICO credit score of at least 600.
Keep in mind that VA loans may require a funding fee unless you have a military service-related disability. Additionally, they can only be used to finance primary residences.
VA IRRL (Interest Reduction Refinance Loan)
Mr. Cooper also offers VA IRRL loans, a refinancing option for people who already have a VA loan. Compared to most refinancing options, an IRRL doesn't require borrowers to undergo the underwriting process again. If you have a low credit score, you might find this refinance option particularly attractive.
However, if you refinance an adjustable-rate mortgage to a fixed-rate mortgage, your interest rate may go up. Additionally, a funding fee is required.
If you're purchasing a more expensive property, you can turn to Mr. Cooper for a jumbo loan. You can take your pick from fixed or adjustable-rate options. However, it’s important to note that jumbo loans often require a larger down payment and come with higher interest rates.
A jumbo loan is ideal for those who need a loan amount between $510,400 to $765,600. Limits depend on the county in which the property is located.
Home Equity Loans
Mr. Cooper is one of the few lenders that offers home equity loans. These allow people to borrow money using the equity on their homes as collateral. The total loan amount can reach up to 85% of home equity, subject to other factors like income and FICO credit score.
Mortgage Rates And Fees
Mr. Cooper offers above-average mortgage rates compared to other lenders. If you're looking for affordable mortgage loans, you might need to look elsewhere.
In general, Mr. Cooper charges a flat loan origination fee of $995. You'll also need to pay a separate mortgage application fee, which covers administrative costs related to reviewing your loan request such as the cost of requesting your credit score from an accredited bureau.
Keep in mind that people who were referred by Mr. Cooper employees may get $500 off their origination fees and may also be eligible for a rate discount. Borrowers may also purchase discount points upon closing.
Closing costs at Mr. Cooper depend largely on the type of mortgage you're getting and your personal financial situation. The lender recommends that you contact it directly to learn how much you'll pay for closing.
In general, however, you can expect the following:
Escrow deposit: Some types of mortgages at Mr. Cooper require you to make escrow deposits. The money you deposit in your account will be used to pay for property taxes and insurance.
Survey fee: Potential buyers may be required to pay a surveyor to confirm the dimensions and area of the property. The surveyor will also confirm if there are no other people or companies with ties to the property.
Title insurance: This type of insurance is designed to protect the borrower and lender in case disputes or claims arise related to the property title.
Private mortgage insurance: If you're getting a conventional loan and your down payment is less than 20% of the property's purchase price, you might be required to get private mortgage insurance. This protects the lender in case you fail to make your mortgage payment.
Inspection fees: This covers the cost of getting the new property inspected for structural issues and pests.
To start the application process with Mr. Cooper, you'll have to submit your personal information through its website. You can also call the hotline. The lender has no physical branches, so you can’t meet with loan officers face-to-face.
Once your mortgage application has been filed, you can handle all the paperwork online. Manual underwriting is available for people with low credit scores or no credit history. However, home loan rates are not published online, and you won't find any tools to compute personalized quotes without submitting your personal information.
Since Mr. Cooper is a mortgage servicer, it only processes payments, handles taxes, and takes care of insurance. After closing deals, Mr. Cooper will sell these mortgages to investors like Fannie Mae and Freddie Mac who will be the mortgage owner.
Keep in mind that your mortgage owner may affect your eligibility for relief programs. For example, most homeowners can pause their mortgage payments if they’re struggling financially. People whose loans are backed by Fannie Mae or Freddie Mac can do this for 3 to 6 months up to 18 months. If you have a mortgage that’s not currently backed by these entities, you’ll have to look for other options.
Mr. Cooper does not have any physical locations, so most transactions are handled online. However, potential borrowers cannot start the process without calling or submitting their personal information through the lender's website. Once their applications have been filed, borrowers can use Mr. Cooper's smartphone app to check their application status and pay their dues.
Mr. Cooper has a B- rating with the Better Business Bureau. It has also received 1,298 complaints in the past 3 years.
The Consumer Financial Protection Bureau filed a complaint on Mr. Cooper in late 2020 for "violating multiple Federal consumer financial laws, causing substantial harm to the borrowers whose mortgage loans it serviced." Mr. Cooper also reached a settlement with the U.S. Department of Justice for illegally foreclosing on borrowers.
Available nationwide: Mr. Cooper's loan products are available in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
Ideal for borrowers with no credit history: Mr. Cooper can consider alternative credit data if you're interested in getting an FHA loan.
Efficient online system: Mr. Cooper has a digital system that allows borrowers to manage their applications and mortgage online.
Customizable loan terms: At Mr. Cooper, you can choose from 15- or 30-year fixed-rate or adjustable-rate term options.
Smartphone mortgage app available: Mr. Cooper has a smartphone app where people can conveniently check the status of their application and make monthly mortgage payments.
Home equity loans and refinancing options available: Mr. Cooper offers home loan refinancing options for borrowers with FHA or VA loans. They also offer home equity loans.
No personalized rates online: Mr. Cooper requires potential borrowers to call, email, or fill out an online form with their personal information to get personalized mortgage rates. You can prequalify online, but you won't find interest rate calculators on their website.
High mortgage rates and fees: Compared to other mortgage lenders, Mr. Cooper offers higher mortgage rates. You might need to pay higher closing costs as well.
The mortgage process cannot be started online: If you're interested in taking out a loan from Mr. Cooper, you need to call or ask the company to reach out to you.
No brick-and-mortar locations: If you're more comfortable discussing loan products in person rather than online, this lending company might not be a good fit. Mr. Cooper does not have any branch locations.
Loan servicing issues: Mr. Cooper has received complaints from the Consumer Financial Protection Bureau and the U.S. Department of Justice regarding its services.
The Bottom Line
Mr. Cooper is a non-bank lender that offers a wide variety of mortgages. Whether you need a government-insured loan or a mortgage with a high loan amount, you can find what you're looking for with this company – just be wary of high rates and closing costs!
If you need more information about home loans, get in touch with Wesley Mortgage, LLC! We'll provide useful information on the different types of mortgages and help you find the best lender in your area.