Author Topic: Borrowed against his house to buy a PC I built  (Read 6169 times)

jpeyton

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Borrowed against his house to buy a PC I built
« on: August 25, 2014, 11:53:44 AM »
I built a PC a while back. I wound up selling it through a friend of mine and got out of it nearly what I put in.

Later, I found out the guy who bought it took out a HELOC (Home Equity Line Of Credit) in order to do so. Holy frigging crap!

To summarize: took out a home loan, paid some of it back (built equity), then took out another loan against the equity, in order to buy a rapidly depreciating computer. Wow.

Left

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Re: Borrowed against his house to buy a PC I built
« Reply #1 on: August 25, 2014, 02:01:11 PM »
um.. how much was the computer? Aren't the fees on heloc fairly high (I mean compared to a price of a computer)

or did you build watson?

gimp

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Re: Borrowed against his house to buy a PC I built
« Reply #2 on: August 26, 2014, 01:47:23 PM »
My PC is around $2500 in parts. It is a beast, a massive beast. What the hell did you build, an 8-socket server?

jpeyton

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Re: Borrowed against his house to buy a PC I built
« Reply #3 on: August 27, 2014, 10:41:36 AM »
For his sake, I wish I was awesome. I think I sold it for about $900. I bought the parts for right around that, so I basically built it for free. I built it for audio recording, so the video card wasn't anything to freak out about for sure.

He bought a bunch of other stuff too (TV's, and other highly appreciating items).

Fees aren't terrible compared to the interest rate you get on it, when compared to a typical credit card. Still, just knowing that my computer is part of his almost certain pending financial doom make me regret it. I know I'm not his guiding voice of reason or anything, but that's just plain gonna HURT.

guitar_stitch

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Re: Borrowed against his house to buy a PC I built
« Reply #4 on: August 27, 2014, 11:22:37 AM »
TVs are highly appreciating items?

Gerard

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Re: Borrowed against his house to buy a PC I built
« Reply #5 on: August 27, 2014, 04:46:25 PM »
In Canada, where houses are still worth more than they're worth, if you follow me, people are starting to use HELOCs for some crazy shit. I saw a sign outside a mortgage broker this week that was offering people second mortgages for school supplies. Seriously. I mean, I get that for some people "school supplies" includes a new iPad and wardrobe, but, man, at some point things are gonna get ugly here.

Elderwood17

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Re: Borrowed against his house to buy a PC I built
« Reply #6 on: August 27, 2014, 08:19:07 PM »
In Canada, where houses are still worth more than they're worth, if you follow me, people are starting to use HELOCs for some crazy shit. I saw a sign outside a mortgage broker this week that was offering people second mortgages for school supplies. Seriously. I mean, I get that for some people "school supplies" includes a new iPad and wardrobe, but, man, at some point things are gonna get ugly here.
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RichMoose

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Re: Borrowed against his house to buy a PC I built
« Reply #7 on: August 28, 2014, 12:52:15 AM »
In Canada, where houses are still worth more than they're worth, if you follow me, people are starting to use HELOCs for some crazy shit. I saw a sign outside a mortgage broker this week that was offering people second mortgages for school supplies. Seriously. I mean, I get that for some people "school supplies" includes a new iPad and wardrobe, but, man, at some point things are gonna get ugly here.

It's OK Gerard, remember in Canada house prices only keep going up. This isn't the U.S. where people got all those subprime loans. The standards in Canada are MUCH more stringent. And our banks are bulletproof because their CEO's said so.

jpeyton

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Re: Borrowed against his house to buy a PC I built
« Reply #8 on: August 28, 2014, 10:50:42 AM »
TVs are highly appreciating items?

That was intended to be dripping with friendly sarcasm. That's exactly my point. Why would you ever pull equity from real estate to finance things that have 0% of gaining equity?

RetiredAt63

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Re: Borrowed against his house to buy a PC I built
« Reply #9 on: September 06, 2014, 10:48:56 AM »
Yikes!!  I haven't seen that one - which bank?  I have a fair bit of bank stock, I may need to re-balance my portfolio!!

In Canada, where houses are still worth more than they're worth, if you follow me, people are starting to use HELOCs for some crazy shit. I saw a sign outside a mortgage broker this week that was offering people second mortgages for school supplies. Seriously. I mean, I get that for some people "school supplies" includes a new iPad and wardrobe, but, man, at some point things are gonna get ugly here.

arebelspy

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Re: Borrowed against his house to buy a PC I built
« Reply #10 on: September 08, 2014, 02:27:06 PM »
Maybe he already had the HELOC, and just wrote the check from the HELOC as it's a fairly cheap source of money.  Still not a great idea, but it's not as terrible as paying for it with a credit card.
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Helvegen

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Re: Borrowed against his house to buy a PC I built
« Reply #11 on: September 08, 2014, 03:49:50 PM »
In Canada, where houses are still worth more than they're worth, if you follow me, people are starting to use HELOCs for some crazy shit. I saw a sign outside a mortgage broker this week that was offering people second mortgages for school supplies. Seriously. I mean, I get that for some people "school supplies" includes a new iPad and wardrobe, but, man, at some point things are gonna get ugly here.

It's OK Gerard, remember in Canada house prices only keep going up. This isn't the U.S. where people got all those subprime loans. The standards in Canada are MUCH more stringent. And our banks are bulletproof because their CEO's said so.

lol

I suddenly remembered this article:

http://www.cbc.ca/news/canada/british-columbia/couple-feel-robbed-by-25-interest-td-car-loan-1.2483342

jaizan

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Re: Borrowed against his house to buy a PC I built
« Reply #12 on: September 19, 2014, 01:22:13 PM »
 There is nowhere where house prices can be relied upon to only go up.

Kaspian

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Re: Borrowed against his house to buy a PC I built
« Reply #13 on: September 19, 2014, 01:35:01 PM »
It's a travesty what's happening here in Canada.  Houses that would go for $60K in the US are going for $250K here.  Toronto?  $900K.  They're so expensive because mortgages are easy to get and interest rates low.  (Thus driving up piggy easy-credit demand.)  However, it's not the banks who are on the line if the buyer defaults, it's the taxpayers!  The home loads are CMHC insured.  The banks would never lend some of these people money if it was their own risk involved.  Buyer defaults, walks away from property, the taxpayers pay the bank the money anyway.  >:(

strider3700

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Re: Borrowed against his house to buy a PC I built
« Reply #14 on: September 19, 2014, 01:47:50 PM »
yup   lots of home owners are going to be in trouble.  The tax payer will be screwed working hard to keep CMHC afloat.   The banks will get the money they're owed and most likely the properties to resell making a profit on it.     I'm a very happy owner of bank stock and don't have any issues sleeping at night over it.

Mega

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Re: Borrowed against his house to buy a PC I built
« Reply #15 on: September 20, 2014, 08:25:08 AM »
yup   lots of home owners are going to be in trouble.  The tax payer will be screwed working hard to keep CMHC afloat.   The banks will get the money they're owed and most likely the properties to resell making a profit on it.     I'm a very happy owner of bank stock and don't have any issues sleeping at night over it.

Well folks, if you own Canadian bank stocks I would serious re-evaluate that position. The CEOs of four of the five largest banks retired THIS year... Sounds like rats fleeing a sinking ship. It is always a bad sign when insiders are selling stock, I think long term CEOs fleeing their companies is a sure sign of trouble.

Also, at least in Ontario, mortgages are recourse loans. Unlike in most US states, the bank/insurance provider can go after ALL of your assests if the sale of you house doesn't cover the mortgage. So defaulting on a house is much more painful here than elsewhere.

Gerard

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Re: Borrowed against his house to buy a PC I built
« Reply #16 on: September 21, 2014, 06:21:21 AM »
Yikes!!  I haven't seen that one - which bank?  I have a fair bit of bank stock, I may need to re-balance my portfolio!!
I saw a sign outside a mortgage broker this week that was offering people second mortgages for school supplies.

It was an independent broker, so they may have been using private mortgage funds. Real banks give you second mortgages for more important things, like motorboats.

RichMoose

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Re: Borrowed against his house to buy a PC I built
« Reply #17 on: September 21, 2014, 09:16:37 AM »
Well folks, if you own Canadian bank stocks I would serious re-evaluate that position. The CEOs of four of the five largest banks retired THIS year... Sounds like rats fleeing a sinking ship. It is always a bad sign when insiders are selling stock, I think long term CEOs fleeing their companies is a sure sign of trouble.

I find this interesting as well. It's also notable that Ed Clark (TD), probably the most honest and blunt of the bank CEO's, repeatedly warns about the governments borrowing policies regarding banks and how low interest rates are leading to financial harm among Canadians. He actually even raised the issue of ultra-low interest rates on home mortgages and banks undercutting each other. I'm not sure if Canadian bank stocks are going to tank or if they'll take large losses on their loan portfolios given CMHC backing up their loans, but I do think they are going to grow much slower and be less profitable than they have been the last 15 years. Canadian consumers are tapped out debt-wise.

SwordGuy

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Re: Borrowed against his house to buy a PC I built
« Reply #18 on: September 21, 2014, 11:08:29 AM »
I built a PC a while back. I wound up selling it through a friend of mine and got out of it nearly what I put in.

Later, I found out the guy who bought it took out a HELOC (Home Equity Line Of Credit) in order to do so. Holy frigging crap!

To summarize: took out a home loan, paid some of it back (built equity), then took out another loan against the equity, in order to buy a rapidly depreciating computer. Wow.

I took out a loan back in the early '90s to buy a high end PC that cost about $5000.   I used it to write a book on a software product (that needed a high-end pc to run on).  I also used it to write a series of technical articles and conference papers about that product and related products.

I made $10,000 off the book.  I got a $10,000 raise the day that book was sent to the publisher.  I got another $10,000 raise the day the book was released to the public.   At one point I was getting $100 a page for technical articles.   I got multiple job and business opportunities from that work that bumped up my salary and job satisfaction considerably. 

That $5000 was an awesome investment.  To date, I'm about $205,000 ahead.    Just sayin...