How Does Figure Use Blockchain for Its HELOCs?

Figure uses blockchain to make getting a HELOC faster and more affordable. This technology removes middlemen, so homeowners can enjoy faster approvals and lower fees compared to traditional lenders. 

Stick around as we explain how Figure uses blockchain to simplify the HELOC process.

How does Figure use blockchain for its HELOC? 

Figure has been using blockchain for its loan origination and marketplace since it was founded in 2018. Through the company, homeowners in 47 states have unlocked more than $12 billion in home equity. The company lets homeowners borrow up to $400,000 with a one-time origination fee.

Blockchain technology for HELOCs enables faster data verification and ensures transactions can’t be altered. Income verification is automatic. This setup allows Figure to save money, which it passes on to homeowners. 

Lenders also benefit from the marketplace: They can access real-time data on loan performance. They can also reduce risk in their portfolios and unlock gains by selling HELOCs to investors through the platform. If you are an investor, you can contact Figure about buying positions in its HELOCs.

Figure originates loans on its marketplace and also works with lenders to offer more financing options. The blockchain offers speed and savings for consumers and lenders. 

How Figure entered the blockchain industry

Figure created its own blockchain, Provenance, in 2018. Provenance is the foundation for all transactions on its platform.

The company’s CEO and co-founder, Mike Cagney, is a well-regarded leader. He also co-founded SoFi and is a leader in the financial technology industry. 

In an interview with Coindesk, Cagney explained that it only costs Figure hundreds of dollars to originate a loan instead of thousands of dollars, the typical cost at a traditional bank. He also highlighted that Figure can serve underbanked consumers—those with limited access to traditional financial services—and unbanked consumers, who don’t use banks at all, offering them new opportunities for financial inclusion.

How does Figure’s blockchain differentiate its HELOC?

The typical HELOC process involves a home appraisal, underwriting, and other components. It can take two to six weeks to get approved for a traditional HELOC, but Figure can give you funding in as little as five business days. 

The process is more streamlined because income verification and other significant parts are automated. You don’t need to wait for the bank’s staff to review your finances. Furthermore, because the process is automated, the cost of staff isn’t tacked on to origination costs.

Blockchain technology requires a learning curve for beginners. However, Figure assists customers through the process. The long-term savings can justify the alternative route, and with the blockchain industry expected to grow by 87% per year from now until 2030, it may be the perfect time to get started.

Should I get a HELOC that uses blockchain technology? 

If you’re comfortable with technology, blockchain offers several benefits. HELOCs with blockchain technology are more efficient and allow you to save money. The main setback is the learning curve. New users must set up a digital wallet to use the Provenance blockchain or its HASH tokens—the digital currency for Figure’s blockchain. 

It’s easier to navigate the learning curve if you’re already tech-savvy. If you don’t want to learn new technology, a traditional lender may be better. Blockchain technology is still new, but based on Grand View Research’s predictions, it will be more common in the years ahead. 

Understand that an unwillingness to learn new technology, like blockchain, can cost you more money and potentially greater headaches dealing with the longer loan origination times.

Kyle Ryan, CFP®

Getting a HELOC with blockchain technology is also beneficial if you have an urgent need for funds.

Blockchains have built-in security

Blockchains are secure and encrypt your data. You can only access your data if you have your private key, which Figure doesn’t store for you. Customers must enter their private key to access their HELOC on the blockchain.

A private key is a set of unique characters that cannot be changed. That’s how it differs from a password, which may be a regular word or combination of words. It’s common for people to use the same password for multiple online accounts.
Blockchains don’t store passwords, so they can’t get leaked. According to McAfee, that gives blockchains an advantage over middlemen, such as traditional banks, which are common targets for hackers. However, you must protect your private key as you would a password.