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Figure Home Equity Loan January 2023

Figure offers a unique type of home equity line of credit (HELOC) — one that can, in effect, also serve as a home equity loan.
Rebecca LakeJan 8, 2023
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Quick funding and unique HELOC

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Best for: Quick funding and unique HELOC
Home Equity LoanHELOC
AmountSee HELOC offering
Term
Rates
Min. Credit Score
Check Figure's website for updated terms and credit requirements.
Pros

The ease of Figure’s online application process is an attractive convenience for some customers. 

Having interest rates fixed at the time money is drawn from the line of credit can make repayment easier to manage than many HELOCs' variable rates.

Ability to take money again after part of the loan is paid off.

Cons

Having to draw the entire loan amount upfront.

The loan origination fee can be somewhat hefty. 

Borrowers should be sure that any rate discount makes up for the size of this origination fee.

Figure offers a unique type of home equity line of credit (HELOC) — one that can, in effect, also serve as a home equity loan. This article explains what’s different about Figure’s HELOC, as well as the pros and cons of a Figure HELOC compared to more conventional HELOCs.

Does Figure Offer Home Equity Loans or HELOCs?

Figure offers a unique form of HELOC — one that can, in effect, also serve as a home equity loan. To understand what’s different about Figure’s HELOC and how it might also serve as a home equity loan, a good place to start is by thinking about the differences between home equity loans and HELOCs. 

About Figure

Figure is a little different from traditional lenders: It’s part of a new breed of financial-services companies that are based heavily on digital technology. (These companies are referred to as “fintech”, or financial-technology, businesses.)

Figure has been around only since 2018, but nevertheless offers an ambitious range of financial services. These include technology-driven private equity and fundraising tools, as well as an investment platform. On the lending side, Figure offers purchase and refinance mortgages through Homebridge Financial Services, as well as a HELOC product.

Figure’s financial services are available in 43 states; the company plans to expand into additional states, too. Figure’s platform is designed to handle the entire process of applying for, and managing, an account online. 

Figure cites its use of blockchain technology as central to its innovative approach to financial services. (Blockchain is the same technology that is the basis for cryptocurrency transactions.) For a HELOC customer, however, the technology itself will be less important than whether it allows Figure to offer competitive terms and deliver good service.

Differences between home equity loans and HELOCs

Home equity loans and HELOCs are similar in that they both are methods of borrowing that use equity in a borrower’s home as collateral. Having that collateral can make it easier to qualify for a loan. It can also lower the interest rate on the loan compared to other forms of credit, such as unsecured personal loans or credit-card debt.

A key difference between a home equity loan and a HELOC is that the former involves borrowing a set amount all at once, while a HELOC may involve taking money out at different times. 

With a home equity loan, besides getting a set amount of money to use upfront, the borrower has a fixed interest rate and a predetermined repayment schedule. This situation is ideal when a borrower has a single use for the money, all at one time. Also, the set repayment schedule can make it easier to plan a budget.

In contrast, since a HELOC is a line of credit, it functions a lot like a credit card. A borrower with a HELOC can tap into the line of credit whenever needed. By establishing a line of credit rather than borrowing all the money upfront, the borrower can secure access to a certain amount of funding without having to pay interest until the money is actually used.

Since money from HELOCs may be accessed at different times and in varying amounts, HELOCs do not have a preset repayment schedule. Also, interest rates on HELOCs are generally variable, which adds to the unpredictability of repayment. Still, the flexibility of being able to access the money when needed is useful for meeting a series of expenses that come up at different times. 

The Figure HELOC

Figure’s HELOC is designed differently from most other HELOCs, however. A Figure HELOC entails borrowing the full amount upfront. Then, once some of the loan is repaid, the repaid amount  is available to be borrowed again later. 

With a Figure HELOC, the interest rate on the amount borrowed upfront is fixed. The rate on any future borrowing against the line of credit is set based on Figure’s interest rates, at the future time the additional money is borrowed.

Because Figure’s HELOC involves accessing the full amount upfront, the borrower starts paying interest immediately. This feature is, as noted, unlike a traditional HELOC,which allows the borrower to decide when to access the money (and, thus, not pay interest until money is actually borrowed). 

With its unusual structure, Figure’s HELOC makes most sense for somebody with a large near-term expense, but who  also anticipates further expenses in the years to come. (For example, the person might be a homeowner planning a major improvement project now, with smaller projects to follow later.) 

Using the Figure HELOC as a home equity loan

Figure does not offer an ordinary home equity loan. However, the structure of its HELOC makes it usable as a home equity loan. 

With a Figure HELOC, the full amount is borrowed upfront. So, in that sense, a Figure HELOC functions like a home equity loan. Upon repaying the initial amount borrowed, the borrower can simply choose not to access the line of credit again. That decision would leave the borrower with just the original amount borrowed and a fixed interest rate on that borrowed amount.

Such a situation would be similar to having a traditional home equity loan. When deciding whether to use the Figure HELOC as a home equity loan, the decision should therefore be based on how competitive Figure’s HELOC terms are compared to those of home equity loans from other lenders. 

Figure Home Equity Loan

As explained, Figure does not offer a typical home equity loan. However, its HELOC can be used as a home equity loan. For ease of comparison with other home equity loans, Figure’s HELOC terms are listed below. (Note: These terms are the same as those listed under the later section that describes Figure’s HELOC in detail.) 

  • Maximum loan-to-value: N/A
  • Interest-rate range: 5.14% to 13.00%. However, the interest rate may depend on being eligible for certain discounts, as well as on the size of the loan-origination fee. The interest rate is fixed at the time of borrowing. 
  • Minimum credit score: 640
  • Maximum and minimum loan amounts: $20,000 to $400,000. The maximum loan amount varies depending on the applicant’s credit score. Also, loan amounts depend on the value of the property and the amount of other debt on the property.
  • Length of loan terms: 5 years, 10 years, 15 years, or 30 years. 
  • Other features: Some Figure HELOCs require a loan-origination fee, which may be as high as 4.99% of the loan amount. Figure offers a 0.25% interest-rate discount to credit-union members, as well as a 0.25% interest-rate discount for enrolling in autopay.

Figure HELOC

When using the Figure HELOC as a line of credit rather than as a single home equity loan, rates on future borrowing may be different from the original rate. Otherwise, the terms are essentially the same as those described in the previous section: 

  • Maximum loan-to-value: N/A
  • Interest-rate range: 5.14% to 13.00%. However, the interest rate may depend on being eligible for certain discounts, as well as on the size of the loan-origination fee. The interest rate is fixed at the time of borrowing. Rates on future borrowing may be different from the original loan rate. 
  • Minimum credit score: 640
  • Maximum and minimum loan amounts: $20,000 to $400,000. The maximum loan amount varies depending on the applicant’s credit score. Also, loan amounts depend on the value of the property and the amount of other debt on the property.
  • Length of loan terms: 5 years, 10 years, 15 years, or 30 years. 
  • Other features: Some Figure HELOCs require a loan-origination fee, which may be as high as 4.99% of the loan amount. Figure offers a 0.25% interest-rate discount to credit-union members, as well as a 0.25% interest-rate discount for enrolling in autopay.

How to Apply for Figure Home Equity Loans

Figure’s application process is 100% online. The company’s website advertises that approval may be received within 5 minutes, though this is subject to verification of financial and employment information. Funding may be received in as little as five days after the loan closes. 

For the initial application process, expect to provide the following information:

  • Name
  • Contact information
  • Address of the property to be used as collateral
  • The property’s occupancy type (primary residence, secondary residence, or investment)
  • Purpose of the financing — and whether it’s for personal or business use
  • Date of birth
  • Salary and other income

Your initial online application will also include authorization for Figure to check your credit report. Credit checks can affect your credit score, so be sure to narrow down your choice of lenders before applying for loans. 

If your application is approved, you will be offered loan terms based on your qualifications. When considering any loan, be sure to base your decision on the terms specific to your situation, rather than on the general terms the lender advertises. 

Figure Expert and Consumer Ratings

Ratings for Figure were not available on any of the eight popular consumer-finance review websites that Bills.com checked. This may be due to the fact that the company is relatively new. 

Figure received an excellent 4.6 (out of 5) star rating on Trustpilot. However, it got an F rating from the Better Business Bureau (BBB). Figure is not accredited by the BBB.

Alternatives to Figure

Don’t see what you want here? Other lenders offer home-equity products that might be better for you. Remember to compare programs and pricing to get a good deal.