It is normally not our business at Money Talks News to urge our readers to take on debt. But when a loan is a good solution, there are good and bad ways to do it. And now there’s technology that allows you to do it the right way at record speed.
Introducing Figure — which can help you get a home equity line of credit (HELOC) of $15,000 to $150,000 in just a few days. Through a process that starts with a short two-screen form (I was pre-qualified for $98,000 in minutes), you can get a quote, finalize paperwork and get funded entirely online without the weeks- or months-long process that has traditionally accompanied home equity loans and HELOCs.
First, let’s look at the reasons that a HELOC makes sense and why it’s a better option than some common alternatives.
When a HELOC makes sense
- Home improvement. Whether you need a kitchen upgrade, roof replacement or a sewer line repair — renovation and repair is often expensive and sometimes urgent. A HELOC will typically come with an interest rate that is considerably lower than a personal loan, as Bankrate explains. And importantly, with a HELOC, the interest you pay is potentially tax-deductible* when the money is used for substantial home improvements. (There’s a nice rundown of requirements and restrictions here.
- A sudden major expense: Were you surprised by a big tax bill, major medical or dental expense? Sure, it would be better if you had this covered by an emergency savings fund so that you could handle it out-of-pocket. But for homeowners, tapping into home equity is a less expensive way to cover this type of cost than many alternatives — and certainly cheaper than turning to credit cards.
- Fill a gap in college-education costs: Even with diligent savings through the years, financial aid, student work programs and scholarships, the cost of higher education can seem out of reach. But if you’re a homeowner with college-aged kids chances are you have enough equity in your home that you could tap into it to cover a shortfall.
- Consolidate high-interest debt. A HELOC can allow you to pay off debt from credit cards or other high-interest loans. Again, it would have been great not to get into that expensive debt to begin with. But paying it off with funds from a home equity loan can make the difference between paying 27% on your balance, and paying 5%. (For another great source of help for credit card debt — especially if you are not a homeowner — check out our Solutions Center
How Figure works
As the name implies, a home equity line of credit is for homeowners who are borrowing against equity held in their property — it is a secured loan. In the case of Figure, to qualify you must have a debt-to-equity ratio of no more than 40%. So, for instance, on a home with an appraised value of $400,000, you could owe no more than $160,000. You also need a credit score of at least 600 — and of course you will get a better rate if you have a higher score. When I filled out the initial two screens — entering that basic information, including name, home address and gross income — I was informed that I was pre-qualified to borrow $98,039.
I wouldn’t need to borrow that much for the tax bill I was faced with, so I checked out the cost of a $15,000 HELOC from Figure Lending LLC. This is what popped up:
Note: The rates here are contingent upon agreeing to use auto-pay for monthly payments. Otherwise, the APR would be 0.75% higher. Also, note that there is a $300 origination fee for this loan.
You could go to your local bank or credit union for a home equity line of credit, and you will likely get a competitive rate — we always encourage comparison shopping. But Figure cuts out the trip to the bank and the many weeks that typically pass while awaiting a loan to be finalized and funded. It’s all online and superbly streamlined. Even the notary process is done online via an e-notary.
“This was seriously the easiest financial transaction I’ve ever dealt with. From application start to approval, it was literally about 7 minutes. The electronic notary made things super simple. My application was approved on Monday afternoon and my loan was funded by Friday. I only wish everything was as simple as this!… — Alex B.”
“This is probably the easiest and best home equity loan on the planet. I needed a loan to pay off my charge accounts which had given me an introductory rate of 0% interest for a year. The year is over and the interest is going up to 29.99%!… — Gloria Berry”
“super easy & fast. other finance groups ask the same BS q’s over and over again … run u thru the ringer associate after associate. i don’t want to beg to tap the equity in my primary residence. just let this group run a algorithm on ur bank accounts and u will get ur $ in a week or so… — Scott Miller”
Know thy risk, know thyself
As with any loan, you need to make sure you’re not getting into a monthly payment you cannot afford. This is extremely important in the case of a home equity line of credit because if you can’t make payments you could lose your house.
Before you seek a loan, consider how you came to need it. If you have a long history of paying your mortgage and other bills on time, and now you have an expense you didn’t budget for — maybe it’s a kitchen renovation or maybe it’s to help care for an aging parent or to make the final push to get your college student across the finish line — then a HELOC could be a great option for you. And if you want to minimize the effort to get there — check out a Figure Home Equity Line.
If you have long-term financial woes or a perennial problem with overspending on credit cards, then you may want to look elsewhere for help. Start with our Solutions Center, which offers a path to higher-paying savings accounts, help for managing debt from credit cards , student loans and much more.
Are you in the market for a loan to do a project or cover an unexpected debt? Share your story with us in comments or on our Facebook page.
*Terms and conditions apply, visit Figure.com for further information.
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