Fairchild,
You've already gotten the direct answer to your question.
I see many people here on the board do keep money out in some kind of seperate account that they are planning to use to make a future pay-off of either house or CCs.
I'll just add that many financial advisors will tell you to keep the money out of the house and invest it instead. And that those who've done it 'successfully' have a much larger bottom line down the road.
I say what you decide to do depends on what kind of secure feeling it gives you to have a paid for home.
Right now today I could easily pay off my home with money that is sitting in a decent paying MMA. My interest rate on the debt is higher than that interest being paid on the MMA. However times change. One thing to consider is what kind of freedom having quick access to extra cash gives you. If something truly !!EMERGENCY!!!came up I could use the cash easily even though these MMA dollars are not designated our Emergency Fund. To get it back out of the house once paid down I would have to either have a HELOC set up, or go make a HEL. Lenders are moody. Interest rates change over time too. Seems to me (I may be wrong) that loan interest rates are generally always higher than savings/MMA interest rates have been.
Kinda rather boils down to - do you want to be a borrower or a lender?
There's a lot more freedom of movement in just keeping the mortgage open and investing wisely. In my case the "I want a paid for house" voice in my head is very loud!
Since we have a bit more cash on hand these days and the market & most folks talking bearish, the Hubster and I are seriously considering taking the plunge and paying ours off. He is also contemplating retirement w/in the next 2-5 years. I personally want it paid off BEFORE he retires. Calculator tape is flying and negotiations continue!
IOW, overall, it's a personal issue based on your time in life and what your goals are. The 'best' financial decisions are not necessarily the same as the 'best' emotional decision. Sometimes a compromise is called for. If you decide to keep it out make sure you invest it safely and don't get all tricky w/speculation! I would rather we had our MMA money in something like bonds, laddered CDs or TIPS - Hubster likes READY cash.
Good luck with whatever you decide!