Figure: 2020 Home Equity Review

Founded in 2018, Figure is a new lender that provides home equity lines of credit (HELOCs) in 38 states and the District of Columbia. Headquartered in San Francisco, Figure uses blockchain technology and artificial intelligence for an entirely digital application and funding process.

Borrowers can receive up to $150,000 through a Figure HELOC in as little as five days. Here’s what you need to learn about the lender and its product to determine if it’s the right fit for you.

Figure snapshot

Benefits

There’s a lot to like about Figure; here are some things to know before you apply:

• Fast funding time: You can get approved for a HELOC with Figure in as little as five minutes and get your money in as little as five days.
• Competitive interest rates: As of late May 2020, the average HELOC rate is 5.41 percent. With Figure, APRs start at 3.49 percent. You must enroll in automatic payments and opt into a Quorum membership to receive the 0.75 percent discount that factors into the lowest APR. What’s more, your rate is fixed each time you make a draw.
• Minimal fees: Figure charges an origination fee of up to 4.99 percent of your initial draw. However, there are no appraisal fees, annual fees, late fees or prepayment penalties.

Drawbacks

Figure’s home equity products do come with a few drawbacks, including:

• Not all properties are eligible: You can’t qualify for a HELOC on co-ops, commercially zoned real estate, multifamily real estate, manufactured housing, houseboats and more — only single-family residences and townhomes.
• Minimum draw requirement: When you receive your Figure HELOC, you must draw the entire loan amount, and you can make additional draws as you pay off the initial amount. In contrast, most other HELOCs allow you to only draw what you need, when you need it, potentially reducing interest costs.
• Relatively low loan cap: HELOCs from many popular lenders have loan amounts that stretch to $500,000 and higher. Figure, on the other hand, has a $150,000 cap.

Types of fees charged

Figure charges an origination fee, which can range from 0 percent to 4.99 percent of your initial draw amount depending on your location. You may also be responsible for recording fees. However, you don’t need to worry about appraisal fees, annual fees, late fees or a prepayment penalty.

If you’re looking for ways to lower your monthly payment, you can sign up for autopay for a 0.25 percent discount and opt into a Quorum membership for an additional 0.5 percent discount.

Loan products offered

Figure offers mortgage refinance, but its only home equity product is its HELOC. Borrowers can get a fixed-rate HELOC between $15,000 and $150,000 with repayment terms of five, 10, 15 and 30 years. The lender uses an automated valuation to appraise your home, so there’s no fee involved.

Once you’re approved, you’ll receive the initial draw amount in as little as five days. As you repay the initial draw amount, you can make additional draws from $500 up to 20 percent of the initial draw amount plus the origination fee. Unlike most conventional HELOCs, Figure uses a fixed-rate model — meaning each draw receives a fixed interest rate that is based on the prime rate at the time of the draw. Because of this, different draws will receive different rates, but the rate you lock in with each draw will not change over the repayment period.

Depending on the length of your repayment term, you can make additional draws for two to five years after the HELOC was originated.

How to qualify for a home equity loan with Figure

You need a credit score of at least 640 to get approved for a Figure HELOC. However, borrowers with higher credit scores have access to larger loan amounts.

For a first lien, borrowers must have a maximum LTV of 50 percent. For a second lien, the maximum CLTV is 75 percent for credit scores of 640 to 679, 80 percent for scores of 680 to 759, 85 percent for scores of 760 to 850 and 100 percent for people with score of 680 and above who select the five-year term. A third lien position has a maximum CLTV of 70 percent, and borrowers in Oklahoma must have a minimum credit score of 720.

Other qualifications include:

• Debt-to-income ratio less than 50 percent, or less than 43 percent in many cases.
• Minimum two years of credit history.
• No delinquencies on your current mortgage in the last six months.
• No foreclosure in the last five years.
• No collections or undischarged bankruptcies.
• No bankruptcy in seven years.

If you’re unsure if you qualify, Figure offers a prequalification option, where you can see if you are eligible for a HELOC without impacting your credit score.

How to get started

Figure has an all-digital HELOC, which includes an online application, e-notary and e-signatures. To start the application process, head to the Figure website and click on “Find my rate.”

From there, you’ll provide some basic information, including your address, property type, name, date of birth, income, email address and reason for borrowing. Once you submit the information, Figure will run a soft credit check and show you a rate offer.

From there, you can officially apply, at which point the lender will make a hard inquiry on your credit report. During the process, you’ll need to connect at least one checking account to allow the lender to verify your income and set up the loan disbursement. You’ll also need to provide a government-issued ID, such as a driver’s license, state ID or U.S. passport.

If your loan is approved, you’ll do a video session with an e-notary, who will verify your identity, allow you to review and sign the loan document electronically and notarize your loan. Note, however, that some counties may require you to work with a notary in person.

If you have a question during the process, you can contact Figure’s customer service team via email at loans@figure.com, phone at 888-819-6388 or live chat on the website.

If you choose to call, representatives are available Monday through Saturday from 6 a.m. to 6 p.m. PT, except on major national holidays.

How Bankrate rates Figure

Editorial disclosure: All reviews are prepared by Bankrate.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the lender’s website for the most current information.