1/04/2024

HELOC Lending


Navigating the HELOC Maze: Aven Financial, Prosper Funding, Figure, and Fraction Compared



Choosing the right Home Equity Line of Credit (HELOC) provider can feel like navigating a labyrinth. To help you out, I compare four popular options in the lending arena: Aven Financial, Prosper Funding, Figure, and Fraction. Four newer online HELOC Lenders VS Huntington Bank or your Bank

Interest Rates:

  • Aven Financial: Competitive rates, often with discounts for existing customers and automatic rate reductions based on on-time payments.
  • Prosper Funding: Rates vary depending on creditworthiness, but can be competitive for borrowers with excellent credit (you need a 721 score).
  • Figure: Offers a fixed-rate HELOC with no origination fees, potentially making it attractive for short-term borrowing.
  • Fraction: Rates tend to be higher than competitors, but they offer unique features like flexible draw periods and interest-only payments.

Fees:

  • Aven Financial: Origination fees and annual fees may apply, but can be waived under certain conditions.
  • Prosper Funding: Origination fees and annual fees are common, and vary depending on loan amount and borrower profile.
  • Figure: No origination fees or annual fees for their fixed-rate HELOC.
  • Fraction: No origination fees, but an annual membership fee applies.

Application Process:

  • Aven Financial: Traditional application process, requiring documentation and credit checks.
  • Prosper Funding: Similar to Aven, with potentially slower processing times for larger loan amounts.
  • Figure: Streamlined online application process, with faster approvals but potentially stricter credit requirements.
  • Fraction: Fully online application with quick decisions, but may require property valuation and additional documentation.

Features and Benefits:

  • Aven Financial: Offers various HELOC options, including lines for investment properties and lines with interest-only payments.
  • Prosper Funding: Strong customer service and educational resources, but limited HELOC options.
  • Figure: Fixed-rate HELOC offers predictability, but limited draw period and early closure penalties.
  • Fraction: Flexible draw periods and interest-only options, but high membership fee and potentially higher rates.

Overall:

  • Aven Financial: Good choice for borrowers seeking competitive rates, discounts, and multiple HELOC options.
  • Prosper Funding: Best for borrowers with excellent credit who value customer service and education.
  • Figure: Ideal for those seeking a fixed-rate HELOC and quick approvals, but be aware of limitations.
  • Fraction: Worth considering for borrowers needing flexibility, but weigh the higher costs and potential rate disadvantage.

Remember general terms and conditions for second position HELOC:

HELOC is second position.

1. borrower had to use title insurance and have/had a first and not changed the deed DIY since the title insurance was issued. This means you could not transfer to LLC after doing your conventional loan.

 2. Are full documentation with past two years IRS taxes net income. 

Personal, S Corp, LLC all the pages 2022 2021 right now and your 2023 profit and or loss or 1099 and w-2. The whole novel is uploaded.

3. FICO standard desired is 720 mortgage middle score/ some will go lower with low DTI 

4. HELOC is a computer program, borrower fits into the boxes, little to no exceptions. If you have tricky income do not apply to one of these online lenders. You need to go to a mortgage banker who can advise as to where or what shop will accept your personal financial profile. Do not apply at several places and wreck your FICO score as the score is vital to approval.

5. prime + 2 or 3 for owner (prime is 8.5 today) max 22% APR for owner occ is 11.011 APR non owner 13.441

 The cost is low to set up.

Often an automated digital appraisal ~ so the value isn't going to hit the highest range.

HELOC is variable rate like a credit card amortized over 15 years.

HELOC can be closed if value declines or credit declines...

BEFORE YOU APPLY LET'S TALK - call me  949 - 784- 9699

I won't pull your credit but will help.