[AMG_G]

I still disagree. They have no other form of assets...100% of everything they have is in that house. He's nearing 50 with 3 young kids and stagnant incomes not many will say they made a wise move. The only reason they have 140k is from selling their home they bought in 2003 (bought for 290k sold for 450k). They barely made a dent in the original mortgage in 7 years. If you think a guy 15 years till retirement and only has 140k equity all dumped into a McMansion then you're wiser than I am.

Originally Posted by squiggs96

I disagree this is the most fiscally irresponsible thing you have ever seen. I bought my townhome in December 2008 for $520,000. My plan is to live in it for at least five years and likely more. The short term fluctuations in price don't affect my mindset at all because I plan on staying in my house. When I decide to sell if my property has gone up in value, likely all the other properties have as well. I will get more for my house, but will have to pay more as well.

For the family that bought the $700k house, just because it drops 10% in perceived value, doesn't mean they've lost money. They only lose if they sell. I say perceived value, because unless they actually put their house on the market and receive an offer, the value hasn't really changed. If their house doubled in perceived value tomorrow, they haven't earned anything yet, because they haven't sold.

Housing cycles go up and down, so if the family is paying off their mortgage as per the schedule, they'll have a balance of about $360k after 15 years. The odds that the house will be worth half the amount they paid for it in 15 years is unlikely. Once again, mortgages are good debt, especially if they are tied to your primary residence and you are holding it long term. It is part of a balanced retirement package, including savings, RSPs, monetary assets, insurance, etc. If they have credit card debt and are constantly dipping into their home equity, than yes that would not be responsible. By them putting down $140,000, they have obviously shown that they are able to save or make good housing decisions.