Home Equity Loan vs. HELOC

  • Mortgage
  • July 11, 2019
  • FCU Team

Do you have a big expense around the corner, like a wedding, home renovation, or college tuition, and need the money to pay for it?

Or maybe you’re in debt, and struggling to keep up with high-interest payments.

Did you know that when you drift off to sleep at night, you might just be sleeping in a pile of cash?

Your home—the place where you eat, sleep, and spend most of your time—is potentially full of equity that can be tapped into to fund whatever needs you may have.

Before we get into that, let’s talk about what equity is. Home equity is the value of your home, subtracted by how much you owe. Say you own a home valued at $280,000, and you still owe $205,000 on your mortgage. Your home’s equity, then, would be equal to $75,000.

Typically, homes are viewed as long-term investments. They accrue value over time but that money isn’t liquid. You’ll see the return on your investment once you decide to sell. But until then, your budget is still limited to the liquid money you have access to.

And when you have big expenses on the horizon, potential future earnings won’t do you much good. Luckily, there are easy ways to unlock the value of your home in the here-and-now.

There are two such options that you can take advantage of to turn your home’s equity into real money that you can use: a home equity loan, and a home equity line of credit.

Home Equity Loan

A home equity loan is a one-time lump sum paid back in monthly installments.

The amount you qualify for is based on your home’s equity, your mortgage payment value and term, your income and your credit history. In some cases, the interest you pay can also be tax-deductible. These types of loans are great for debt consolidation, allowing you to replace high interest payments with one, simple, low-interest monthly payment.

A home equity loan can also be an investment in your home since you can pour the borrowed money into a home renovation project. Imagine your home with a brand new bathroom, a pool in the backyard, a sun room, or an updated kitchen.


A home equity line of credit, or HELOC, allows you to continually borrow money up to a certain amount. As you pay off the principal, your credit revolves, allowing you to use it again.

Unlike a loan, you only pay interest on the amount of money you borrow.

A line of credit can be great for when you may have multiple expenses down the road at various times, or are just unsure about the total amount of money you’ll need.


At Florida Credit Union, we offer personalized loan options, allowing you to have the best loan and credit choices for your budget. Our member service team is available 24/7 for loan applications and are ready to help you whenever you need it. Call us at 1-800-284-1144 to get the process started.

Florida Credit Union
Hi, Eugene. One of our Member Service Representatives would be able to best discuss your options. Please call us at 1-800-284-1144, or visit one of our 11 in-person branches. Thank you for reaching out.
8/7/2019 1:35:01 PM

eugene wentworth
I have high interest credit card debt. I'm not sure what would be best
8/7/2019 12:05:02 PM