Thinking about a change? Heck, aren’t we all? Whether you’re ready to hit the road for a big, long trip or need a new kitchen, let’s talk about how you can get there and how a Figure HELOC can make it happen.
What’s a HELOC?
You use your home to secure a home equity line of credit (HELOC), a line of credit that allows you to pay for large expenses or consolidate your higher-interest rate debt on other loans like credit cards. A HELOC often has a lower interest rate and the interest may be tax deductible.1
You must have equity in your home to qualify for a HELOC, which means that the amount you owe on your home must be less than the home’s value. A typical rule of thumb: You can borrow 85% of the value of your home minus the amount you owe. You must share your credit score and history, employment history, monthly income and monthly debts with your lender prior to HELOC approval.
The interest rate on a HELOC typically varies depending on the benchmark prime rate.
How Does a HELOC Compare to a Cash-Out Refinance?
HELOCs and cash-out refinances give you two completely different options to tap into your home’s equity. Think of HELOCs working like a credit card instead of a conventional loan, or a fixed amount to borrow against. You can borrow against the credit line during a “draw period,” usually up to 10 years, with a 20-year repayment period. You must repay the HELOC in a lump sum or installments.
Why You Should Get a HELOC
Why get a HELOC? Take a look at a few reasons.
Reason 1: You can finance home improvements.
Want to put in a patio or an addition on your home? You can get a HELOC to finance home improvements. If you anticipate paying off the amount in a short amount of time, a HELOC could help you do that.
Reason 2: You can cover emergency expenses or consolidate debt.
You might have your emergency fund completely tapped out. If that’s the case or if you have other debts, a HELOC might fit the bill. You might not want to tap into other investments because you’ll pay capital gains taxes, so consider a HELOC, particularly if you only need the funds for a short amount of time.
Reason 3: You can get a HELOC for any other reason.
Technically, you can use a home equity loan to pay for anything but you might want to use the money for larger expenses. Here are some of the most common uses for home equity loans. Take a look at a few other reasons you might want to use a HELOC for besides home repairs or remodeling your home:
Medical expenses: Did you or a family member have an emergency, undergo major surgery or spend a long stint in rehab? These types of medical expenses can result in high medical bills.
Education: A HELOC can help pay for private school or college.
Starting your own business: If you feel fairly assured that your business will take off, you can use a HELOC to start your own business.
No matter why you decide to tap into a HELOC, remember that you’re using your home as collateral, which means you could lose your home if you fail to make your payments.
Reason 4: You want to tap into low interest rates.
This may be a good time to consider a HELOC, because the Federal Reserve has kept interest rates low due to the damage COVID-19 has inflicted on the economy. It might be cheaper in the long run for you to pay off high-interest debt with a HELOC.
Reason 5: Figure makes it easy.
Figure builds products with two things in mind: speed and ease, plus it's backed by powerful blockchain technology. Figure’s comprehensive set of offerings (mortgage refinance, HELOCs, personal loans, and asset management) gives you what you need throughout your financial life, from when you first start working through retirement.
How to Get a HELOC with Figure
Ready to get a HELOC with Figure? Great choice. Complete the loan process today (in fact, you can apply in just minutes with Figure’s 100% online application).
Step 1: Fill out your basic information.
Fill out your basic information, such as your residence address, financing purpose, birthdate, salary and additional income. Create a login and password from this page.
Step 2: Verify your information. Basic info
Next, Figure will ask you for more detailed information, including verifying your identity, linking your income sources, signing documents and talking to an eNotary.
Step 3: Get your money.
Other banks and lenders have stopped offering HELOCs, but Figure can still help you. You could receive funding in as little as five days.2
Get a HELOC for Your Needs
When you’re looking for a much easier way to tap into your home's equity or get cash using your equity, land on Figure. You could get a low APR on a home equity line of credit.
Figure understands that your financial life can become really complex. You need to make decisions about saving, spending and borrowing and if you want to do all of those things with one company, Figure can help you do it.
Remember that you could put your home at risk if you default on your HELOC payments, so don’t put your home at risk unnecessarily! Know the HELOC requirements before you jump into choosing a HELOC for your needs.
Melissa Brock is the founder of College Money Tips and Money editor at Benzinga. She loves helping families navigate their finances and the college search process. Check out her free essential timeline and checklist for the college search!
Figure Lending LLC dba Figure. 15720 Brixham Hill Avenue, Suite 300, Charlotte, NC 28277. (888) 819-6388. NMLS ID 1717824. For licensing information go to www.nmlsconsumeraccess.org. Equal Housing Opportunity.
1 You should consult a tax advisor regarding the deductibility of interest and charges to your Figure Home Equity Line.
2 Approval may be granted in minutes but is ultimately subject to verification of income and employment. Five business day funding timeline assumes closing the loan with our remote online notary. Funding timelines may be longer for loans secured by properties located in counties that do not permit recording of e-signatures or that otherwise require an in-person closing.