Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
What is a 'mortgage freedom account'?
Old 09-03-2009, 09:56 AM   #1
Recycles dryer sheets
 
Join Date: Feb 2009
Location: Canada
Posts: 81
What is a 'mortgage freedom account'?

I saw this mentioned in the thread 'eliminating debt is my main FIRE goal' but I couldn't figure out exactly what it is that they were talking about. I did some searches but I just get a lot of unrelated threads (apparently the words 'mortgage', 'freedom', and 'account' are used a lot here ).

I'm just looking for a quick explanation, or a webpage link that goes into detail.
__________________

__________________
schmidtjas is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-03-2009, 10:03 AM   #2
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,149
I think it is a generic term for a savings or investment account set aside for the specific purpose of paying off the balance of a mortgage.
__________________

__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 09-03-2009, 10:09 AM   #3
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,613
I've also heard terms like this used for schemes which pay off your mortgage with a HELOC where you deposit your paychecks into it and pay bills from it directly -- thus implicitly applying all of your savings to increasing your equity.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 09-03-2009, 10:20 AM   #4
Moderator
Sarah in SC's Avatar
 
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,457
Scheme is the right word for it. Not a smart deal.

here's some of the preposterous language used to describe this, ahem, strategy:

Home Equity wealth puts you ahead of the race to Mortgage Freedom. This is the key to Consumers Wealth. Refinancing that Home Equity gives the cushion to work with. This system shows you how to find extra dollars to pay down the Principal on your existing Mortgage extra fast. It is all about using Other Peoples Money, OPM. Get a Line of Credit from your equity, like a HELOC. Use that money wisely to build your wealth using our Insurance Investing techniques, for example. Think of the new, HELOC money as the seed money that attracts other dollars like a magnet to put to work in the fast mortgage repayment system. But. Don’t get lost in the appeal by Lenders who offer a HELOC so you would take the equity in your home to go on a cruise. Holidays are fine, but you must focus on the your goals. Your seed money cannot be consumed but nurtured into a Money Tree. The Smart Mortgage Early Repayment Plan (SMERP) gives that financial nurturing.

The underlined parts are my favorites! <snort>
__________________
“One day your life will flash before your eyes. Make sure it's worth watching.”
Gerard Arthur Way

Sarah in SC is offline   Reply With Quote
Old 09-03-2009, 10:22 AM   #5
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,613
Quote:
Originally Posted by Sarah in SC View Post
Scheme is the right word for it.
Sometimes I type before I think, but this time I very deliberately chose my words.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 09-03-2009, 10:49 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Jun 2004
Location: No. California
Posts: 1,601
I think a mortgage freedom account could be an acct where the person saves their property tax and homeowners insurance payments until the annual bills were received. I used to save a specific amount monthly to pay those bills as I never had an impound account for my mortgage.
__________________
KB is offline   Reply With Quote
Old 09-03-2009, 01:11 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
freebird5825's Avatar
 
Join Date: Feb 2008
Location: East Nowhere, 43N Latitude, NY
Posts: 9,017
Isn't the Money Tree that thing in the front yard that my Mom used to say was out there when us kids begged for something we couldn't possibly afford?
I looked and looked, but never found it. I finally gave up when I was about 10.
__________________
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
freebird5825 is offline   Reply With Quote
Old 09-03-2009, 01:26 PM   #8
Full time employment: Posting here.
CCdaCE's Avatar
 
Join Date: Apr 2006
Posts: 887
I started this thread about alternative mortgages awhile back. Might be similar to what you're talking about.

Basically, if you have a high interest rate on your existing mortgage, lots of cash flow during the month, and a large mortgage amount, it might work. But the fees will probably kill most of the benefit.

-CC
__________________
"There's those thinkin' more or less, less is more, but if less is more, how you keepin' score?
It means for every point you make, your level drops. Kinda like you're startin' from the top..." "Society" - Eddie Vedder
CCdaCE is offline   Reply With Quote
Old 09-03-2009, 02:49 PM   #9
Thinks s/he gets paid by the post
growing_older's Avatar
 
Join Date: Jun 2007
Posts: 2,609
When I've heard the specifc term "Mortgage Freedom Account" it was referring to a side account earmarked for mortgage payoff. The idea was instead of prepaying the mortgage any excess "principal" payments were directed to the side account. If nothing unexpected happened, the side account would eventually meet or exceed the mortgage balance and you could decide to payoff the morgage in full at that time (or not, as you wish). Until then, if the unexpected happened, house prices tanked, prolonged unemployment, financial emergency at a time when HELOC was unavailable, etc, you could tap the MFA for whatever money you needed under circumstances where you might not be able to tap home equity (if you had been paying into the mortgage). It was also supposed to help allow the option to walk away from an upside down (non-recourse) mortgage if a small downpaymet deal went bad in a housing crash.

Because everyone seems to love Freedom in the name, it seems like the term is now being used for all type of plans (and schemes) which are mortgage related. You have to get more info about what someone means when they use this term now.
__________________

__________________
growing_older is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Health Savings Account/Flexible Spending Account Bongybo Health and Early Retirement 5 07-26-2008 07:46 PM
25yo, want freedom by 40 FreeBy2020 Hi, I am... 15 02-20-2008 03:23 AM
Mortgage principle is basicly savings account Lsbcal FIRE and Money 28 01-17-2008 05:58 PM
3 days to freedom jambo101 Hi, I am... 20 12-19-2007 08:01 AM
Not permitted to deduct mortgage interest from taxes - mortgage v renting? claire FIRE and Money 12 01-06-2007 04:43 PM

 

 
All times are GMT -6. The time now is 01:37 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.