mortgage savings accounts

[Anonymous]

No it has nothing to do with making extra mortgage payments a month!

Like mamalawery said, its about having a account that you put your paycheck into (some how the account is connected with your mortgage) You use the account like a regular checking account, pay your bills like you usually do, but the money that has been in the account some how helps bring down your mortgage payments.

It has nothing to do with making extra payments each month. You are not paying any more on your mortgage then you do now. It is complicated, the clip Mauly posted from utube sums it up.

Mauly how would I find the other clips for that story, there were several with the interview with the man that came up with it all, that clip was just the intro to the main story. Thank you again for finding it!

[mamalawery]

i'm still trying to find more info on the net. i did find info here....

http://www.ehow.com/about_4620059_what-mortgage-savings-account.html?ref=fuel&utm_source=yahoo&utm_medium=ssp&utm_campaign=yssp_art

http://www.commbank.com.au/personal/accounts/mortgage-interest-saver/default.aspx

Message Edited by mamalawery on 02-26-2009 05:02 AM

Message Edited by mamalawery on 02-26-2009 05:13 AM

[Anonymous]

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@Anonymous wrote:

No it has nothing to do with making extra mortgage payments a month!

It has nothing to do with making extra payments each month. You are not paying any more on your mortgage then you do now. It is complicated, the clip Mauly posted from utube sums it up.

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Well yes, it does.  It's just a LOC that gives you the flexibility to say, "Just kidding, I need that money back."  So at best you have your paycheck working against the mortgage's interest for the 2 weeks until you spend it.  Then it does nothing for you.  So doing the math here, let's say your paycheck is $2,000.  It's essentially earning 5% interest for 14 days.  You save yourself $3.83 for those two weeks assuming you pay all of your bills on the last day of the two weeks.  If you do that the whole year, you save yourself $100 in interest over the year.  At that rate it only takes 35 years to pay for the software  

It's only really beneficial if you have extra money and you leave that in the account for very long periods of time.  This, essentially, is making extra payments.  The average mortgage doesn't have the "just kidding" factor but the same thing can easily be accomplished.  I already have my savings set up so I can just pay extra on my mortgage as I wish..  This is essentially a high-yield savings account with a big fee.  But to each their own..  

Message Edited by rmily on 02-26-2009 07:11 AM

[MattH]

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@Anonymous wrote:

No it has nothing to do with making extra mortgage payments a month!

Like mamalawery said, its about having a account that you put your paycheck into (some how the account is connected with your mortgage) You use the account like a regular checking account, pay your bills like you usually do, but the money that has been in the account some how helps bring down your mortgage payments.

It has nothing to do with making extra payments each month. You are not paying any more on your mortgage then you do now. It is complicated, the clip Mauly posted from utube sums it up.

Mauly how would I find the other clips for that story, there were several with the interview with the man that came up with it all, that clip was just the intro to the main story. Thank you again for finding it!

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The basic theory is, between the time your income gets deposited into your account and the time spending leaves your account you can earn some interest on it.  You could get similar results by sweeping cash you don't need at the moment into the highest-interest money-market fund available to you, except that in most cases the mortgage interest rate is higher than any other ultra-safe investment available.  However, as you would learn had you read with close attention the articles I linked, in a low-interest environment most people cannot generate enough free cash flow for this sort of gimmick to make a substantial difference as opposed to simply making additional principal payments.  There is ONE plan that does offer a substantial advantage over most mortgages, not because of cash-flow gimmickry but because if offers more flexibility.  The number one downside of making principal payments on a conventional mortgage is that should you need that cash the only way to get it back is to refinance or take out a home equity loan.  The ONE plan the Mortgage Professor likes has the key feature that if you have paid down your principal below where it would be had you made only the regular payments, then you may stop making payments for a while should you face a cash flow issue.  In other words, you can put reserves into the loan and later draw on those reserves without having to refinance.