California home equity loans are easy to get, but they are not always so easy to repay. Look into your California home equity loans before you take one out.
Sure, if you live in California you will be guaranteed a significant amount of home equity. You are also guaranteed easy access to meth-amphetamines and Pride festivals - but that doesn't mean you should drop the ball and live the life of a strung-out androgeness. Just because California home equity loans are there for virtually every home owner in the state does not mean everyone should take out such loans - you have to consider your financial safety first.
Here at The Mortgage Council we like to ponder each and every mortgage decision that crosses our path, and we believe you should do the same. Think about why you are looking for home equity loans and what you would do with the money once you got it. Would you use a California home equity loan to consolidate debts and make home improvements? Or would you spend the money on a down payment for a BMW, or perhaps a Volkswagon? An Audi? We know what Californian's are after, and we also know their tendencies to spend a little more loosely than prudence and good judgement ever allows. The effects of abusing California home equity loans are sever and do not appear until after you borrow:
The important thing to remember with California home equity loans is you will probably still have your first home loan to contend with - you are adding an additional monthly payment.
Imagine you bought your California home for $400,000 and took out a $320,000, 30 year mortgage at a fixed rate of 5.8%. That correlates to a monthly payment of about $1,877. Thats $22,524 a year in monthly payments alone - we're not even touching the high taxes applied to all California property. So, $22,524 a year - using the traditional debt to income rations thats would mean you would have to make at least $64,350 a year to qualify for this prime rate. No problem, you're a Californian! And you're gonna take out an additional $50,000 in California home equity loans! Thats an additional loan, an additional debt accruing interest, and an additional $600 a month in payments - if you got a really great deal for a 10-year term at 7.8%. Suddenly you are paying $2,477 a month in payments because of your California home equity loans, for a total of $29,724 a year, meaning to qualify for these rates your take-home salary would now have to be $84,925. Thats a lot, even on California standards, and its something to think about when you look for California home equity loans. The equity is always there, but your ability to pay back the equity is not.
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