A New Type of Mortgage (cont)

I have spent a lot of time looking into alternatives and talking it out with fellow mortgagees...my current thinking is that since we are all investing for retirement and we are all paying mortgages, why not combine the two and cut out all the fat so we can own our houses quicker? Wouldn't it be nice to own the place you bought in say 10 years...?

Here is my thought—it definitely needs some work but I think it has some merit already. Why not get a bunch of people to invest their retirement together (what they are now putting into a 401k tax treatment) into a big pot of money that can be used to buy their homes with 1% or even 0% loans? That big pot of money can be invested in low risk investments that will make small returns, but keep up with inflation. Then as the participants qualify, the collective buys their house and they start making monthly payments to the collective. Without monster interest rates, you could actually own the house in 8 or 9 years. At which point you’d have fully paid back the collective, and you’d still have the retirement you invested when you signed on to buy the house. Now, here you are a decade later owning the house outright. Your last 10 years of retirement savings wouldn’t have done a whole lot, but you’d certainly have a lot more money to invest for retirement over the next 20+ years without that mortgage!

I have some numbers upcoming to illustrate how the standard ‘mortgage + 401k’ program stacks up against the above proposal...stay tuned…