is someone familiar with the concept of checking and savings mortgage?

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That is where your home loans, checking and savings together in a single account. You pay all your money against your mortgage balance and the balance and pay all your bills from your account balance increased mortgage. This accelerates the payment of interest and reduces the mortgage balance as low as possible. Is there something that I care of?

2 Comments
  1. Reply
    InspectorBudget
    May 19, 2011 at 1:18 am

    Yes. There are dangers to the concept.

    The concept is fine IF you have the discipline not to spend money in the account.

    Because it works like a “free” overdraft, you will tend to spend more since you do not see any bills – the interest you pay is added quietly onto your outstanding balance.

    I am sure that for some folks who have the discipline and record-keeping ability, this program can, and does, work well.

    For the other 99% who have little financial discipline ro commitment – the program is a smooth ride to disaster, bankruptcy and worse.

  2. Reply
    Andrea T
    May 19, 2011 at 1:40 am

    I just read a bit about this and it seems like it would only work really well for people who have large checking and savings account balances.

    And as mentioned in the first answer, since it appears they also include a line of credit, many people would probably end up spending more and increasing their balance.

    Paying down your mortgage quicker is something you can do yourself. You send an extra check each month and write on it that it is a principal payment.

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