It's easy to get a home equity loan to turn your home into the mansion of your dreams. But how far should you go?

Home equity loans are a great way to tailor your home to your individual needs. But you don't want to go crazy and spend such a huge fortune on your renovation that it becomes impossible to sell your own personal Godzilladome.

Home improvement gone awry

For some examples of home improvement gone wild, look to the stars. Sports and entertainment stars, to be specific.

Back in his day, MC Hammer was a prime example of luxury gone awry. Solid gold bathroom sinks and a dishwasher installed in the master bedroom don't add as much to the value of a property as you might think. We never got to see what that mansion was actually worth, as it was repossessed in bankruptcy; but chances are good that it sold for far less than the $12 million purchase price. MC got hammered.

These days, it's not unusual for a rookie point guard or running back to buy the kind of showcase home you'd see on MTV Cribs. But what happens two years later, when the player is traded across the country and left with a real estate dilemma? How do you find a buyer for a 15-room mansion with an indoor basketball court?

Over-the-top features often end up being more trouble than they're worth. Plexiglas staircases don't appeal to everyone, and even Manny Ramirez can't expect a full-price offer for his Boston condo, which sports a miniature Fenway Park bedroom.

These kinds of choices can leave multi-million-dollar palaces sitting unsold on the market for years, even at drastically reduced prices. This is one of the many ways a young superstar can squander untold millions of record contract advances, or major league signing bonuses.

Realistic resale renovations

On a less outrageous scale, there are plenty of popular home improvement choices that don't add very much to property values. These include fancy gazebos and hand-painted murals. These may be tasteful extras for your own benefit, but they're not good investments.

If you want to fix up your house for a resale, you're better off with useful improvements, like an inexpensive coat of paint, refinishing the wood floors, or upgrading the kitchen appliances. The best returns on your investment occur in the kitchen and bathrooms, areas that get outdated fairly quickly and where buyers will spend plenty of quality time. Curb appeal always helps, too, so fresh siding or an exterior paint job helps.

The next time that you're looking at home improvement options, remember why you're doing it. If you don't ever plan to move out, go nuts and get that gold-and-marble Jacuzzi and 30-seat home theater. But if you're getting ready for a sale, stick with the basics. Just think about the interest you'll pay on the home equity loan whenever you reach for the pricey options. Sometimes, less really is more.

Published on June 6, 2007