Because of the increase in "market value" for the house for which you paid $120,000, your banker has offered to make you a real estate loan of $250,000. I will describe the entries for that transaction entity by entity (or column by column.)

Your Bank

1. You sign a note obliging you to repay Your Bank $250,000 in the future (we will ignore interest for now.) Your Bank enters that note as an asset in the account Real Estate Loans. (Debit -- use of funds).
2. Your Bank makes a credit entry in its Demand Deposits account (specifically for you). This promise to pay you creates a liability for the bank and the source of funds for the real estate loan.

You

1. You record this transaction in your books by first making a debit entry to Cash in Bank. For you this entry reflects your current use of the money by leaving it in the bank.
2. Remember that to get this money you created a liability for yourself. You record that as a credit (source) in your Real Estate Loan account.

Other Bank

Other Bank does not get involved in this transaction.

 

These simple entries show what happens when a bank "makes money." You commit to pay the bank $250,000 in the future, with interest (not recorded here), and they make an entry on their books that becomes money for you.

With this real estate loan you and your bank have created new money.