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The problem with that is your money is all tied up in real estate which isn't liquid. It also has ups and downs.
It's quite possible, you could leave your kids with a house that WAS worth $750,000 and is at the time they need to sell it, worth only $400,000. (Similar to the situation in the US)

While that is a bad scenario, it is far from the worst case scenario. The worst case scenario is that one or both parents become ill or lose their jobs and have difficulty finding new employment. The problem with this is that it tends to happen when other people are experiencing the same (bad economic conditions) and at that point the liquidity issue really comes into play. Try selling that $750,00 house in a bad economy where everyone is being laid off and those that aren't are seeing coworkers walked out the door and have fear of being laid off. Now that investment is not helping.

The better scenario would be balance in life. The $400,000 house and $350,000 in diversified investments/savings. When the unemployment/illness hits, you have a choice -- sell the house or dip into investments/savings.

I am also assuming everyone has an additional $750,000 in retirement savings or else the kids won't be getting left anything as the sale of that $750,000 house will be used to find retirement.

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You can come into these same difficulies with a 400K home and a fancy car in the drive way. It's just spending your cash differently. You should always have 6 months extra money to fall back on. But if you get extremly sick you may have to sell your home/car regardsless if it's 400K or 750K. If it's a 750k home you can always sell it and move into a smaller home. The most your going to lose is $50K, but that highly unlikly. If you purchse for 750K today next year value will most likely be more. If you purchased for 750K when this tread started, you will not be losing 50K you would have made 50K.

Yes real estate has it ups and downs but long term it's always an up.

How much did your parents purchase your child hood home for? How much is it worth now?
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exactly correct.

The house you're in right now is it worth around $750,000?

Not if the amount owing on that 400k home only represents 2.5-3x your household income. I'm not talking cars. Cars are not an investment. They are consumables -- like clothing.

I'm also not talking about home value decreasing. I'm talking about putting your family in danger by taking on DEBT at LOW rates that you can't afford when the rates go up. The thought "oh, we will just sell then" makes no sense, because when rates go up, nobody is left to buy your house at that price.

Every situation is different. If you can go to a mortgage calculator, punch in your mortgage owing and a rate of 9% and still honestly say you have no problems, then there is nothing more to say. If you see a mortgage payment you have no possibility of affording at 9%, you made some very poor "investment" decisions. My point is, I know what my friends make. Oh, 80k a year. STUPID for getting a 550k mortgage with that income.

Your mortgage is what.. 15..20..25...30..35 years? Do you honestly think we will hover at 2.99% for 30 years? No, if you bought today with a 5 year lock in at 2.99%, in 5 years when you renew it's very likely the rate will be 6%. After another 5 years it's likely the rate will be 9%. At that point, you have another 25-30 years to go at 9+%.

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Have you guys heard of a mortgage that keeps your mortgage payment the same, and if the rates go up, it just adds more payments to the end of your mortgage? Like you're guaranteed to never be in over your head, it will just take longer to pay off the mortgage. Someone was telling me about something like that. Not sure if they were drunk.

Many variable mortgages have something similar, but no guarantee. When rates rise the payment does not go up as long as the payment covers the interest. Eventually the rate gets high enough the payment doesn't cover all the interest (or some other trigger point) and the payment must go up. Perhaps that is what s/he was thinking and just misunderstood or was misled on the guarantee factor.

So for example the rate is 2.75% now... if it goes to 5% would it still remain the same? How much more are we talking about before they adjust it?

This is one of the worst ideas I have ever heard, IF it is being advertised as a "Plan A".

It is pretty much like refinancing every 5 yrs without ever reducing your amortization period,( Like in 5 years, getting a new 25 yr mortgage, then another, then another, then another, barely paying down your balance as you go, likely raising your borrowed amount each go-around but never making any forward progress. People do this once out of necessity, and it is actually a good solution if meant to be temporary. But for this to be your actual plan A, then renting is mathematically the way to go, hands down the majority of the time.

I wish the high school curriculum would be updated to include important stuff like this... to include ACTUAL "home economics"... make it a general applied math course or something. It is important, life altering stuff!

+1. Replace useless compulsory courses that no on uses in the real world (like English) and replace it with stuff like this. I also think that they should teach the CSC course as well (or portions of it), especially since Canadidans are now more than ever required to take responsibility for their own retirement funding.

We're talking about people losing their homes if the rates go up. just confirming thats not necessarily the case. Im pretty sure you could also make lump sums every year with that Plan A. Like you mentioned, for emergencies, like if it suddenly goes up, you wont get screwed and lose your house as some people are saying. So its confirmed this does exist? I so thought he was full of it.

dabills why do you seem to enjoy to make fun of what you perceive to be the economic situation of your fellow neighbours? Its almost like you're sitting there laughing at the people that own homes, or have debt, or have no savings. you made a decision to sell your home, decided to rent instead and use the extra income to live large and invest. are you happy with the decision? usually when people are happy at a major decision like that they dont have time to spend all day crapping on other peoples situations. something isnt adding up here.

the post directly above my last post, you imply people who own homes have no savings and tons of debt and are therefore deserving of your smug sarcasm. Dont run from it, its apparant in all your posts, stand behind it.

Also you've mentioned numerous times you'd rather rent, save money, and do things to enjoy your quality of life and invest the rest.

I feel like im talking to someone with multiple personalities.

Are you not during most of this thread shitting on people you dont know for making poor economic decisions? Like why would you care, are you not happy renting?

Dude, there is no use, save ur fingers. I've challanged him a few times and he flips his opinion like a switch.

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Are you happy renting?