Jesus Chri- A COLLATERALIZED LOAN taken out of your PAID OFF HOUSE?? What the fuck could you possibly need that money for??”
You're not going to get an uncollateralized $300k loan. And an equity loan or HELOC isn't an unusual thing.
There is at least one sort-of-reasonable reason this scheme could have been conceived that doesn't involve critical levels of money trouble at the inception of the loan:
tax-aware borrowing*. Early-year payments on a mortgage loan are
almost completely all interest. Mortgage interest on loans up to $750,000 is deductible. So for relatively low cost, it's a way to get cash that is mostly tax deductible against taxable income, freeing up more income to
throw away on shitty art, foolish cars, and snacks snort invest. For the low, low price of under $2k/month ($1749 for $316k at 5.27% (which is just today's default on the linked calculator)), you'd get a deduction of around $16k/year in the early years of the loan ($16k in interest, $4k in principal). So if
he's he was at the highest marginal rate (37%), the deduction of $16k-ish is like netting $6k-ish. Spending $21000 (mortgage payments) to yield $6000 in net non-taxed income and get $300k cash on hand could be worth the risk for someone thinking they'll have a high income going forward and
sure-thing investments investment returns above the interest rate, and believing they'll be able to pay off the loan once the deduction is down to a pointless amount (or refinance and restart the deduction to the max). Would have to run real numbers to know. Risky, unless you know you'll never be so stupid as to fuck up your life to the point you can't or don't pay your mortgage. But why take it out against your main house, rather than your
rental property sidepiece's temporary residence? Probably bc the lender didn't want the murder home.
Pro tip: a house of cards is a bad idea when you're a narcissist coke head with no native numbers intelligence.
*this usually is for large amounts, as in the link. But Nick liked to think of himself as a baller, so.
he had to have ignored multiple warnings.
He 100% did. His lender is an investment advisory firm, which implies a larger relationship. Or at least a former one. He's likely been dodging their calls for months.
And literally everyone knows that if you stop paying your mortgage, foreclosure is on the table.
If things were that absolutely dire, he could have sold that dumb car 6 months ago and more than caught up with his arrearages.
How funny he was snippy about having more pressing Maslow concerns than race issues. He was too busy in the sex level to bother with meeting his children's absolutely foundational ones of food, security, and shelter. Or clean air to breathe, given all the coke flying around in it.