The Best Way to Finance Your Home Renovations


Warmer months are just around the corner which means it’s time to finally accomplish those remodeling projects on your TO-DO list! But, where to start?

If you’ve been binge watching Fixer Upper on HGTV you’re probably more than ready to create the kitchen of your dreams! Maybe your family has grown and it’s time to finally add another bathroom.

Bringing new life to your home with a bathroom remodel or kitchen remodel is extremely exciting… But where are you going to get the financing for the project?  A home improvement loan or a HELOC from Missouri Central Credit Union are great options! Wondering what the difference is between a home improvement loan and a Home Equity Line of Credit? How do you know what the best possible option is for financing your home improvement project?

Don’t worry; this decision can easily be made by discussing the differences between a Home Equity Line of Credit (HELOC) and a Home Improvement Loan so you can figure out the best financing options for your remodeling project.

How to determine the best way to finance your home improvement project?

There are a TON of variables that pave the road to your finance journey. As you have probably already guessed, cost is one huge factor that can affect the course of action you take to finance your remodeling dreams. But don’t get overwhelmed! The best way to figure out your financing needs can be solved by simply mapping out the expenses for your renovation loan. The best part is Missouri Central Credit Union can help you figure out a comfortable loan based on your credit to help you apply for a home equity loan. Our Member Service Representatives are professionally trained to take the weight off of your shoulders and help you come to the right conclusion of a loan that fits within your personal budget.

Costs for Home Improvement Projects

Missouri Central Credit Union offers home improvement loans at low rates on loans up to $7,500. Do you know what you could do with $7,500? Take a look at the approximation gathered from the Home Advisor True Cost Guide to find out:

Room: $355 - $957
Exterior: $1,698 - $3,760
Interior: $934 - $2,556

Cabinet repair: $135 - $489
Garage repair: $148 - $326
Roof repair: $316 - $1,113
Windows: $138 - $481

New Items:
Toilet: $223 - $538
Sink: $220 - $582
Shower Doors: $556 - $1,288
Ceiling fan: $143 - $351
Entry Door: $508 - $1,406

Home Improvements:
Wood Floors: $2,582 - $6,475
Windows: $2,597 - $7,413
Deck: $4,074 - $9,948

So basically those bathroom updates you’ve been thinking about, according to the list above, could cost as low as $1,400! This is with the assumption that you don’t want to buy the cheapest toilet for your bathroom remodel and maybe you want to add a little extra flair; you could apply for a home improvement loan from MCCU for $2,000 that would work wonders on your outdated bathroom.  Now let’s discuss the BIG things that you could accomplish with a Home Equity Line of Credit/HELOC!

Home Equity Line of Credit (HELOC)

Home Equity Lines of Credit have made it possible for homeowners to afford renovations on their homes without tapping into savings or overwhelming their checking account. What is a home equity line of credit and what makes it different from a home equity loan? A home equity loan allows you to borrow against your home’s value over the amount of any mortgages against your property. A HELOC uses your home as collateral; allowing you to borrow up to a certain amount and functions as a line of credit like your credit card. The best thing about this is you can borrow all at once or over a draw period!

For example, at Missouri Central Credit Union we provide a 10 year draw period and up to 15 years to repay. We also allow you to borrow up to 95% of your appraised value. Essentially the draw period is the amount of time you can withdraw money from your home equity credit line. With a HELOC you have the flexibility to use your money for much more than just home renovations. Obviously we know that you deserve a brand new kitchen remodel and a fresh coat of paint to bring out the personality in your children’s rooms, but with a HELOC you can actually use your line of credit towards things like a wedding or even a dream vacation in the Bahamas. Ready to get started on a HELOC application or maybe you have questions? Reach out to one of our Member Service Representatives to apply for a home equity line of credit today!

Our lobby is open Monday-Thursday 9am-5pm, Friday 9am-5:30pm and Saturday 9am-1pm.  You can also apply online and we can assist with any of the steps by calling us at 816-246-0002.  Once you are approved, you will receive your HELOC quickly and without any red tape.

Home Equity Line of Credit Calculator

Take a look at how much money you could get using our helpful HELOC Calculator!

Step 1: Determine the appraised value of your Home

First you need to figure out how much equity you have in your home.  This can be done by subtracting the amount of money you still owe on your home by the current home’s value.

Step 2: Calculate all outstanding mortgages
Second you need to calculate your total amount of mortgages you owe on your home.  This includes first mortgage, any second mortgages and any other debt secured by your home.

Step 3:  Factor in your loan-to-value ratio (LTV)
The loan-to-value ratio is the percentage of your home’s appraised value that your lender will allow.
For example, an 80% loan-to-value ratio would allow you to have $80,000 in debt secured by a home appraised at $100,000 (100,000 x 80%).

But let’s just say that you don’t need a substantial amount of money and you would rather do a couple small DIY projects around the house like painting your privacy fence white or maybe you love your bathroom and you just need an updated shower. Home Improvement Loans are PERFECT for smaller scale remodeling projects.

Home Improvement Loan

Home improvement loans are great for small, less-expensive, or DIY upgrades such as a few new windows, a new garage door, or a splash of color to your bathroom tile. These loans are small loans that are given in the full amount and are paid back over a shorter amount of time. Home improvement loans are given for specific projects and your home’s equity is not taken into consideration. Don’t get stuck with companies that try to charge you a higher interest rate for a short-term loan! We offer as low as low rates on home improvement loans up to $7,500 and our Member Service Representatives work with you every step of the way to find an amount affordable to your budget.

Still not sure what type of loan is right for your home improvement project? We don’t expect you to know all of the answers. Talk to a Member Service Representative today to go over your options.

We’ve got you covered.

Give your friends at MCCU a call today at (816) 246-0002 and let’s start planning the optimal Spring/Summer renovation loan for your dream home!