The Mr Cooper home equity loan is creating an avenue to access cash without messing with your current mortgage rate when you are in need of tapping into the value of your home. Under this option offered by Mr Cooper you are able to borrow keeping your home equity and use the loan to repay in a fixed term loan. It would be a good idea to get into the way it works, what to be aware of and whether it may be appropriate to you.
So What Is the Mr Cooper Home Equity Loan?
A home equity loan of Mr Cooper is actually a second mortgage:
- you borrow a lump sum of money with the security of your first mortgage.
- It is provided as a second lien to the first house.
- Your current mortgage does not change, so the low rate that you currently have can be preserved, but only the new loan is current.
- The cash can be used on other things such as home improvement, clearing of debts or essential expenditures.
Features at a Glance
Fixed interest, term: This is in contrast to a line of credit where you take a single large deposit and make payments to them in a fixed term.
Retains your original mortgage rate: Since the primary mortgage is retained, you do not change to a loan with a high-interest rate.
Second-lien eligibility: The facility is only open to those people whose first mortgage is serviced by Mr Cooper and whose property meets their standards.
Why the Mr Cooper Home Equity Loan?
The following are the reasons to think about this option:
Keep your existing mortgage rate: In case your existing mortgage rate is good, you will not lose it.
Cash whenever you need it: Home improvement, school fees, or debt relief, whatever you want, you have the freedom.
Known timing of repayment: Fixed payment schedule- you are aware of the amount of money you pay after each month.
Potentially less expensive than unsecured debt: With this being tied to your home equity rates can be more competitive than credit cards or personal loans.
Important Considerations
You are taking a second mortgage: It implies that you now have two mortgages on your house and are adding more to your total loan debt.
There are qualification criteria: Your equity, credit score, debt/income ratio, and a combination of the loan, value ratio all counts.
Not ubiquitous: e.g., not available when the property is located in some states (e.g., VT, NY, DC, GU, PR, VI) and there are state-specific limitations in Texas.
Possibility of foreclosure: Since the loan is secured by your home, default may result in foreclosure of your home.
How It Works Step-By-Step?
Estimate your equity
Determine the difference between your current value and current debt on your first mortgage to make an estimate of your equity.
Check eligibility
Assert that your first mortgage is serviced by Mr Cooper and that you have met location, credit, and debt-to-income requirements.
Apply to the home equity loan
You will fill an application with Mr Cooper, give home appraisal or value documentation, credit score, income check etc.
Loan approval and closing
Upon approval, you will close on your second mortgage and you will get a lump sum. Your first mortgage remains as-is.
Repayment
The home equity loan is a small loan that you pay a set sum every month as per its term and interest. You are still making your first mortgage payments on your own.
Mr Cooper Home Equity Loan versus Cash-Out Refinance
Major Differences
- Through the home equity loan, you retain the first mortgage and take a second loan.
- In cash-out refinance, you take out a new mortgage to replace the current mortgage, and in this case, the cash-out is added to the loan balance, and you lose your original rate.
When HEL Might Be Better?
- You are having a low mortgage rate and you do not want to lose it.
- You desire a lump sum as opposed to a revolving line of credit.
- You like regular fixed payments as opposed to variable payments (most HELOs).
When Depending on a Cash-Out Refinance Would Work?
- It is true that you have a high mortgage rate and it is better to refinance to a low mortgage rate.
- You are interested in rolling your first mortgage and your cash-out together.
- You have no problems with completely substituting the initial loan.
Eligibility and Requirement of Mr Cooper Home Equity Loan
- As a primary home; 1st lien mortgage with Mr Cooper.
- The property should be in qualified states (there are certain geographical limitations).
- Approval depends on equity, combined loan-to-value (CLTV), credit score, debt-to-income ratio etc.
- You can spend the money as you please (home improvements, debt consolidation, major purchases).
Pros & Cons
Pros
- Maintain your reduced mortgage rate.
- Predictable fixed payments.
- Home equity cash availability.
- Liquidity in the utilization of funds.
Cons
- You take a second mortgage the difference.
- The second mortgage rates can be more than your original mortgage.
- Limited to not all states or all homeowners.
- Your house is your security lose it in case of default.
FAQs
Would I be able to apply when I do not have a first mortgage with Mr Cooper?
No, the home equity loan will only be available when your first lien mortgage is serviced by Mr Cooper.
Should I refinance my first mortgage in order to tap my home equity?
No. a major advantage of the Mr Cooper home equity loan would include the fact that you do not forego your current mortgage, but also take a second mortgage.
How much can I borrow on Mr Cooper home equity loan?
It will rely on your equity, credit, joint loan value and debt to income ratio. As a rule you can borrow up to a part of your home worth within the first mortgage balance.
Is it possible to use the loan proceeds to anything?
Yes. you may spend the money on upgrading, repairing the house and paying off debts, buying important items, or any other financial requirements.
Does the home equity loan exist in all areas?
No. there are state restrictions and only properties with first mortgage serviced by Mr Cooper are qualifying. As an illustration, Texas and some territories may not belong to the list of the properties.