Minimum Credit Score | 580-620 |
Term Length | 10-30 Years |
BBB Rating | |
Loan Amounts | Up to $2 Million |
Minimum Down Payment: | |
Mr. Cooper has lived up to its brand tagline “changing the face of home loans”. Not only do they have the greatest selection of mortgage with bad credit loans (both conventional and specialty), they also accept low credit scores and charge low-interest rates.
Between a straightforward website, mobile apps for Android and iOS, zero-fees for online payments, US-based customer service, and ability to offer mortgages in 49 states, Mr. Cooper has everything covered.
Apply Online
You can apply for a Mr. Cooper mortgage online, however, to finalize any deal, you’ll have to speak with a mortgage professional to conclude the process. The website is exceptionally resource-rich, and a first-time buyer can gain a substantial amount of mortgage wisdom just by visiting and reviewing the site itself. For instance, you can check the Loan Types on their website (with Pros and Cons) before committing to a type and offer.
Home Loans
Mr. Cooper offers a varied selection of mortgages to meet the needs of a first-time buyer or someone with a low credit score. You can find most of the details related to prices and rates on their website. For FHA home loans, Mr. Cooper accepts credit scores as low as 580. You will need a minimum credit score of 620 for accessing some conventional loans. Down payment rates range anything between 3.50% to 20.00% (except for VA Loans which can start as low as 0.00%).
Conventional Loans
This loan requires low down payments (minimum 5% + mortgage insurance) and has flexible as well as adjustable rate options. However, these conventional loans are not insured by the Federal Government. The repayment terms are 15 and 30-year options. Mr. Cooper’s maximum loan amount for conventional loans is $679,650.
Fixed-Rate Mortgage
The rate of interest for this type of loan does not change over the life of the loan. You can accept a repayment term of 30 years, and the monthly payment will be fixed for this entire duration. However, this type of loan might incur higher rates than comparable adjustable rate mortgages depending on interest rates set by the central bank and other factors.
Adjustable-Rate Mortgage
Unlike a fixed-rate loan, your interest rates for this type of mortgage will change as per the National Rate Index (within certain limits). You can choose from a 3-year lock-in, 5-year or a 10-year lock-in. If you’re in the process of repairing your credit score, this can be a good option.
FHA Loan (Federal Housing Administration)
Low-credit score, moderate to low income, limited funds for a down payment – if these are your problems, FHA is likely the best mortgage solution for you. It is a Government-backed loan with low down payment rates (minimum 3.50%) and flexible credit requirements. If you’re struggling to get a conventional loan, FHA might save the day. However, it does incur an upfront and monthly mortgage insurance cost.
FHA Streamline Loan
This is for borrowers who already have an FHA loan running. It is a refinancing solution in case an existing borrower wants to refinance the outstanding mortgage balance with a lower monthly payment. Mr. Cooper offers the quickest turnaround in Streamline Loans, but refinancing does involve a fee.
Veterans Affairs (VA) Loan
VA Loans are approved by the Department of Veterans Affairs. Any borrower who is a current or past member of the US military or spouse is eligible for this loan type. It does require a lot of documentation, but it sure has the lowest down payment rates (and even 0.00% in some cases).
VA IRRRL Loan
An Interest Rate Reduction Refinance Loan (IRRRL) is a refinancing loan for borrowers who already have an outstanding VA Loan. Mr. Cooper doesn’t require you to provide a credit score, and you may not be asked to pay anything from your pocket. If you are migrating from a VA ARM loan, you might see a drop in the interest rate. If you do want an IRRRL loan, make sure you have a funding fee ready.
Jumbo Loans
Any loan that exceeds the limits of a conventional loan ($484,350 - $726,525) is a jumbo loan. You can buy or refinance high-value properties with this loan while selecting either a fixed or an adjustable mortgage rate.
How Mr. Cooper Works
Getting started with a Mr. Cooper mortgage means visiting their official website and browsing through the loan types before filling up a form. The other option is to call their customer service line to speak to a loan officer. Either way, you will need to connect with someone via phone to proceed. Sadly, Mr. Cooper doesn’t offer online-only applications.
It is licensed to offer loans throughout the US (except Hawaii) but doesn’t have any physical branch offices. Once you submit the contact form, a loan officer will contact you to discuss the available options. They will also guide you through the pre-qualification and pre-approval processes. You can check the status of your application in real-time and after all the documents are validated, your mortgage will be processed. You’ll be duly notified about how much you need to pay on closing.
Pre-Qualification & Approval -To clear this process, you will need to provide your tax history, credit report, employment history, social security number (SSN), self-employment documents, and any additional proof.
The Application process – Fill the URLA (1003) with full disclosure. Once all necessary paperwork is processed, your application is forwarded to an underwriter.
Underwriting and Closure – This is a fairly straightforward process. All you need to do is sign the documents and purchase insurance. Pay the upfront fee as agreed and your application is successfully completed.
