Your home is one of your most valuable assets. Home equity – also known as - the difference between your remaining mortgage loan amount and the current market value of your home - is established through initial down payments and continues to increase overtime as you make monthly payments on your loan. It may also increase if the value of your home rises. Homeowners can borrow against their home’s equity for larger purchases and unexpected expenses, so let Ameris Bank explain the difference between the types of home equity financing, and how to choose the right one for your needs. 

Home Equity Loans vs Home Equity Lines of Credit¹

There are two different ways that consumers borrow against the equity in their home – either as a home equity loan or a home equity line of credit (HELOC). Home equity loans and home equity lines of credit are considered secure loans that use the borrower’s home as collateral. Both borrowing strategies provide homeowners with immediate access to funds, which need to be repaid according to the loan or line of credit terms. So, what’s the real difference between the two? 
 

• A home equity loan gives the borrower a single lump sum of money that is paid back at a fixed rate and monthly payments. 
• A home equity line of credit (HELOC) gives the borrower a revolving credit line that can be continuously drawn upon and paid back as needed, sort of like a credit card, but usually with better rates. This can cause fluctuations in the monthly payment, as borrowers spend more or less. 

Which is Right for You? 

The best way to borrow will be based on your money management preferences and how you plan to use the funds. If you prefer predictability and fixed payments, then a Home Equity Loan may be the best option. This can be particularly helpful when you have a defined budget and need to pay for certain large expenses such as college or car repairs, or even debt consolidation. If you prefer flexibility and don’t mind balancing the books every month, then a HELOC might be right for you. This can be useful if you are funding a project such as home renovations and need to pay multiple contractors or taking time off to travel. 

How To Get a Home Equity Loan or Line of Credit 

You can apply for a home equity loan or line of credit from Ameris Bank. Your approval will be dependent on your home loan-to-value-ratio, creditworthiness and other factors decided by your lender of choice. Contact our team at Ameris Bank to get started. 


Sources:

1. https://www.investopedia.com/mortgage/heloc/home-equity-vs-heloc/

Reviewed April 2025
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.