Your home is more than a place to live—it can also be a financial resource. Over time, as you pay down your mortgage and your home's value increases, you build equity.

That value—home equity—may give you access to borrowing options that can help fund major expenses, manage debt, or support long-term financial goals.

There are two primary ways homeowners typically access their equity:

• A Home Equity Loan
• A Home Equity Line of Credit (HELOC)

While both use your home as collateral, they work in very different ways.

First, What Is Home Equity?

Home equity is the difference between your home’s current market value and the amount you still owe on your mortgage or other home loans.

Home Equity = Home’s Current Value – Mortgage Balance

As your mortgage balance decreases or your home’s value increases, your equity grows. That equity may be used as collateral for certain loans. You can easily estimate your home’s equity using our home equity calculator.

Option One: A Home Equity Loan

A home equity loan allows you to borrow a one-time lump sum based on the equity you’ve built in your home. At Sandia Area, qualified borrowers may be able to borrow up to 90% of their home’s loan-to-value (LTV), minus their current mortgage balance, subject to appraisal, credit approval, and other lending requirements. To get an estimate of how much you may be able to borrow, try our Home Equity Calculator.

How a Home Equity Loan Works

• Estimate your available equity with our Home Equity Calculator.
• Apply for the loan amount you need (minimum loan amount is $5,000).
• If approved, receive your funds in one lump sum.
• Repay the loan with predictable, fixed monthly payments over the life of the loan.

A home equity loan allows you to borrow a single lump sum of money based on your available equity.

Advantages of a Home Equity Loan

• Fixed interest rate
• Fixed monthly payment
• Set repayment term
• One lump-sum disbursement.

How is a Home Equity Loan used?

Home equity loans can be used for a variety of things including:

• Major home renovations or repairs
• Debt consolidation
• Large, planned expenses

Why Choose a Home Equity Loan?

• Predictable payments make budgeting easier.
• Interest rate stability over time.
• Simple repayment structure.
• Generally lower interest rates than many other loan types.
• A great option if you know exactly how much you need to borrow.

Option Two: A Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit (HELOC) is a flexible line of credit that’s secured by your home.

Unlike a home equity loan, you don’t receive all of your funds upfront. Instead, you’re approved for a credit limit and can borrow only what you need, when you need it, during the draw period. At Sandia Area, that draw period lasts five years, giving you the flexibility to access funds as expenses arise. As you repay the balance, those funds become available to borrow again, making a HELOC a great option for ongoing or unexpected expenses.

Qualified borrowers may be eligible to borrow up to 90% of their home’s value, minus their current mortgage balance, subject to appraisal, credit approval, and other lending requirements.

How a Home Equity Line of Credit (HELOC) Works

• Estimate your available equity with our Home Equity Calculator.
• If approved, you’ll receive a credit limit based on your available equity.
• Borrow only what you need, when you need it, during the draw period.
• Make payments based on the amount you’ve borrowed.

Advantages of a Home Equity Line of Credit (HELOC)

• Revolving credit line
• Typically, variable interest rate (view current Sandia Area rates here).
• Flexible borrowing and repayment.

How is a HELOC Used?

The funds from a HELOC can be used for anything from paying for home improvement projects to weddings. This option works best when costs are ongoing or unpredictable.

Examples include:

• Multi-phase home improvement projects
• Large projects, events, or expenses with unpredictable costs
• Unexpected expenses

Why Choose a HELOC?

• Access funds as needed.
• Pay interest only on the funds that you use.
• Financial flexibility over time.

Home Equity Loan vs. HELOC: The Simple Difference

Important Consideration: Your Home Is Collateral

Both options are secured by your home, which means repayment is important. A default on your payments could put your home at risk.

Before borrowing, consider:

• Your monthly payment comfort level
• The stability of your income
• Whether your expenses are fixed or flexible

Which One Is Best for You?

It often comes down to how you plan to use the money:

• Choose a home equity loan if your costs are known and fixed.
• Choose a HELOC if your costs are ongoing or uncertain.

Both options can be powerful financial tools when used responsibly.

Getting Started

Applying is a fairly simple process. First, you'll need to gather some paperwork:

• A copy of the original warranty deed
• A copy of the original owner's title insurance policy
• A copy of your homeowner's insurance policy or declaration page
• verification of income

From there, simply submit your application and wait to hear from a member of the lending team. They'll walk you through the remaining steps, which may include a property appraisal if needed. Some lenders charge additional closing costs for these activities, but at Sandia Area, there are no closing costs for loans up to $150,000.

The process can take anywhere from a few days to a few weeks, depending on the documentation and requirements involved. Submit your application in minutes online.

Schedule a Consultation

We have a great option to follow up with experts before applying! Whether you're just exploring your options or ready to apply, our lending specialists are here to help every step of the way. We'll answer your questions, explain your options, and make the financing process as smooth and straightforward as possible. Schedule a Consultation

Final Thoughts

Home equity isn't just a number on paper—it's a financial resource that can help support life's bigger goals. Understanding how to access it wisely is the first step in deciding whether it fits into your financial plan.

If you're exploring your options, our team can help you determine which solution may work best based on your goals and budget.

Schedule a Consultation