Add a game room, and value, to your home
Not so long ago, we were happy to while away hours
playing pingpong or shooting pool in an unfinished basement, spare
bedroom or partially cleared garage. Of course, that was before
HDTV, video games and Texas Hold 'Em took recreational control of
To meet today's expanding leisure needs, many homeowners
are adding or converting an existing space into a specialized game
room. Spend a weekend touring new suburban developments and in almost
every model home you'll find a "bonus" or game room filled
with toys for kids of all ages.
But you don't have to buy new to get what builder
and remodeler Robert Ernst calls a specialty space. Brochures for
resale properties tempt buyers with details on the extra room where
you can enjoy all types of entertainment offerings without ever
"It all has to do with cocooning," says
Ernst, vice president of FBN
Construction Company. His Boston-area company has helped homeowners
create custom spaces for game rooms as well as for in-home theaters
and even home gyms.
"People's time is just too tight," says
Ernst. "It's really a function of time. They find the rooms
offer a great space where you can have your friends over, have fun
and not feel like they're abandoning the family."
Added economic incentive
While game rooms and other home improvements certainly provide a
recreational outlet that keeps family members close to home, it's
not the only reason that additions are popular. Just as important
is the value that a remodeling job can add to a residence.
"With home values going up, people feel it is
a better investment to have their money in their homes than in the
stock market," says Ernst. "If I invest $100,000 or $150,000
in a specialty space, my house will be worth that much more now
and will appreciate more over the years than the stock market."
The historically low mortgage interest rates of the
last few years have helped fuel the invest-where-you-live approach.
Coupled with already-escalating property values across most of the
United States, many homeowners pulled out extra cash via refinancing
and put the money back into home improvements.
Today's homeowners have a variety of choices to make
their home pay for its own upgrades:
- Home equity loan: Homeowners
who want the stability of a fixed-rate, fixed-payment loan secured
by a residence's increased value usually opt for this. The most
common knock against these loans: The rates are usually higher
than on other equity-based products. If you choose a home equity
loan, Bankrate can help you find
for the best deal in your area.
- Home equity line of credit: A
home equity line of credit, or HELOC, is a variable-rate loan
that operates much like a revolving credit card account. The money
is there when you want to use it and you don't have to use the
full amount that's available. Just be sure you keep
an eye on the Federal Reserve Board, because when the Fed
raises interest rates, your HELOC rate will go up, too.
- Cash-out refi: Here you refinance
your mortgage for more than you owe, getting extra cash you can
use elsewhere. But remember, a cash-out
refi means your mortgage starts all over again, potentially
putting you further away in time from paying it off.
Home equity borrowing is appealing not only because
of the recent low loan interest rates, but also because it's generally
easy for a homeowner to be approved for such loans and in most cases
interest on the new debt is tax
deductible. Keep in mind, however, that all types of home equity
debt are risky; if you default on the loan, the lender could foreclose
on your new-and-improved residence.
For Ernst's clientele, accessible home equity money
isn't the prime catalyst for creating a game room or making any
other change to a residence.
"Most of our clients are high-end so they're
not depending on refinancing. They have existing funds to do it,"
he says, noting that $500,000 is spent on the average FBN remodel
job. "What's driving our market is the value."
Of course, most folks spend substantially less than
that. But regardless of where they get the renovation funds, they
should see similar, although smaller-scale, rewards in their home's
value -- as long as they make smart changes to their homes. Ernst
says all homeowners need to ask themselves: Am I going to get this
money back when I sell this house?
"It's not just the dollars you put in, but where
you put them," he says. "You can spend $100,000 on something
that doesn't meet the 21st century lifestyle and it's an elaborate
decoration that's not conducive to day-to-day living. You want to
increase value of home and also increase enjoyment of the lifestyle."