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Is a Money Merge Account a Good Way to Pay Off Your Mortgage? Print
Monday, 1st October 2007 (by J.D.)This article is about Choices, House and Home, News
Over the past few weeks, I’ve received several questions about money merge accounts (sometimes called “Australian mortgages”). I haven’t paid much attention to these because I’m unfamiliar the products. But when Abbie wrote last week, I decided to do some research. Here’s what she said:
My financial guy handed me a DVD for United First Financial the last time I spoke with him. Apparently they are a company that uses “sophisticated algorithms” to compute how to best pay down a mortgage using a HELOC and a Money Merge Account, with the end result being that the mortgage is paid off in fewer than 30 years. (Their preferred statistic seems to be 11 years.)
I’m new to the whole homeowner thing, and know there are differing opinions regarding paying off a mortgage early, but was wondering if you’re familiar with this system. I’d appreciate any information or opinion you have regarding money merge accounts or UFF; a bit of web research comes up with inflammatory chats and the company’s own claims, but nothing from a reliable third party.
I spent three hours researching money merge accounts, and was unable to find any better information than Abbie did. From what I can gather, here’s how they work:
- The homeowner sets up a home-equity line of credit (HELOC), borrowing against the value of his property.
- Some large sum is withdrawn from the HELOC and used to pay down the primary mortgage.
- The homeowner does not deposit his paychecks, etc. into a traditional savings account, but applies them to pay down the HELOC.
- From time-to-time, another large chunk of money is taken out of the HELOC and applied to the primary mortgage.
- In case of emergency, the homeowner takes more money out of the HELOC.
- Though the HELOC will likely have a higher interest rate than the primary mortgage, it’s actually cheaper to maintain because of the way the interest is calculated.
In the case of United First Financial, all of the timing for these actions is prompted by proprietary software, for which the homeowner pays a one-time fee of $3500. These prompts are not mandatory, but if they’re not followed, it defeats the purpose of the program.
The consensus on the web seems to be: yes, these programs can help you pay down your mortgage quickly; however, they don’t do anything that you could not do yourself for free. The expense might be worthwhile if:
- You want to pay off your mortgage.
- You don’t believe you’ll have the discipline to pay down your mortgage on your own.
- You do not intend to move — you believe you’ll be in your current house for many years.
But most people with the financial resources to accelerate mortgage payments are able to do so without the assistance of a third party. The easiest (and most flexible) mortgage acceleration program is the one you control yourself: simply send extra money to your bank on a regular basis (being sure to note that the extra ought to be applied to principal). You’ll save nearly as much as you would with a money merge account. (Proponents of MMAs admit this!) If you find after a couple years that you lack the discipline to do this on your own, then you might seek a reputable source for a money merge account.
You can read other discussions of money merge accounts at these sites:
- It’s important to note that the Australian Securities and Investments Commission doesn’t like money merge accounts. “Consumer organisations … concluded years ago that there were no savings to be made, and that promoters were engaged in unlawful conduct.”
- Fat Wallet Forums: United First Financial — Looking for the truth contains 52 pages of discussion on this subject.
- Fat Wallet Forums: Mortgage accelerator/offset accounts facts and myths
- Real Estate Blog: Money merge accounts: Good fairy or demon?
- The Simple Dollar: Money merge accounts: Are they a good deal for home borrowers? (742 comments and growing!)
- Asset Builder: Accelerated home ownership thru line of credit
Before you begin a mortgage repayment program of any kind, be certain that you understand the consequences. Accelerating your mortgage payments may provide psychological comfort, but there may be smarter financial choices. Last year the Federal Reserve Bank of Chicago released a study [PDF] that found:
About 38% of U.S. households that are accelerating their mortgage payments instead of saving in tax-deferred accounts are making the wrong choice. For these households, reallocating their savings can yield a mean benefit of 11 to 17 cents per dollar.
All of this discussion about money merge accounts is just theory. I’d love to hear from somebody who has first-hand experience with them. Do you love the idea? Hate it? Do you think it’s worth the cost? Let us know!
Note: Just as I was finishing this post, I recieved another e-mail about money merge accounts. They seem to have reached some sort of critical mass.
October 1st, 2007 at 5:14 am
Dave Ramsey covers this product (and it’s variations) on his program. While he likes the idea of paying off the mortgage early, he states that you don’t need these programs to accomplish the task. You can do the same thing on your own without spending $3000 for a piece of software and go through the trouble (and risk) of a setting up a HELOC. The worst part is when these programs claim that you can just follow the program and don’t have to change your spending habits - as if these programs “create” money. They most certainly can’t. The only way to get there is a budget folks.
October 1st, 2007 at 5:46 am
These sound like much more complicated versions of what in the UK are referred to as current account mortgages. I’m sure I’ve heard that they are generally considered to be worth doing only if you have a very variable or irregular income e.g. quarterly deposits of your earnings.
October 1st, 2007 at 5:51 am
I have two basic issues with programs like this.
1) The person still has to control thier expenses or they gain nothing, in fact in this case they go backwards because everything is tied to a HELOC now. Unfortuanetely it sounds like a lot of people view this as the easy way out. It isn’t.
2) If someone pays off credit card debt or other unsecured loans with this they have essentially take a bunch of unsecured debt and tied it to thier home. So if the worst case scenario happened and they lost everything including savings, or equity in the house, their debt is now tied to the home and they can be foreclosed on. If you keep unsecured debt unsecured worst case is a few bad marks on your credit report, but you maybe work enough to pay the house payment.
October 1st, 2007 at 6:21 am
I have been hit with this offer as well. It smells of multi-level marketing to me. The literature I read gives no option to get into the program without going through a referral of some sort. At the end of my research, I am with Alias (Comment 1). Save the $3500 fee and apply it as your first payment against your mortgage.
If you apply a $3500 lump sum to the principle of a $200K 30-year conventional mortgage (6% interest) in year five of the loan, you will knock a whole year off of the term saving nearly $12K in payments over the life of the loan. The only risk is the missed opportunity of risking the money elsewhere with investments.
October 1st, 2007 at 6:32 am
J.D, if you’re interested, we have a product in Canada called the Manulife One mortgage which is similar to the “merge accounts” that you mention here. From my review, it would be cheaper to get a discounted mortgage rate than to pay full price for the “merge account”.
Here is my review of the Manulife One Mortgage.
October 1st, 2007 at 6:40 am
I watched a pitch about these accounts about a month ago, and as I was listening I opened up excel and was able to recreate all of their results by using a biweekly payment structure. Only with the biweekly method you also got to keep your $3500.
I honestly don’t see a case for these products at all.
You are being sold a product, not a solution.
October 1st, 2007 at 7:11 am
can’t comment on the US situation (I’m UK/Australian-based), but certainly in the UK situation, current account mortgages aren’t worth it. You pay generally higher interest rates (1-1.5%), and there is a danger that if you aren’t disciplined, you just keep spending your mortgage, because it’s effectively just a giant overdraft.
October 1st, 2007 at 8:12 am
If followed correctly, I am sure that these programs (and other programs like bi-weekly mortgage payments) promise as delivered. However, if they work, then you can do it yourself and save on the expenses.
Essentially, you are using your average daily balance that you would have in your checking account as a way to lower your average principal and your interest payments.
The most simple solution I have found to accelerate your mortgage payments simply involved direct deposit and automatic payments. Take you mortgage payment, and divide it by twelve. Add this amount as an extra principal payment, each month, and have the mortgage company automatically deduct it from a savings account. Then, take this total payment (with the extra principal) and have half of it directly deposited into the savings account with each payment. What you get out of this gives you the bi-weekly effect, but with the extra principal applied monthly, instead of as a lump sum at the end of the year, an extra payment sitting in the savings at the end of the year, plus interest sitting around. You can then take the extra and have 14 payments.
Couple that with a $3500 initial principal payment, and you can substantially knock-down your principal and term, and save on interest without a huge difference in your realized lifestyle.
October 1st, 2007 at 8:22 am
I we paid off our mortgage on our older, smaller, house by making large payments every month–the amount we would have spent if we had moved out of our “starter” home and into the mini-mcmansion that we could “afford” according to the mortgage calculators. I don’t think we lost that much money by not investing the cash elsewhere–after all, there was very little possible downside, by paying off the mortgage as early as we did, I think we got some insurance against any future devaluation of housing stock; we literally paid less, so our house is worth more to us now, no matter what happens in the overall market. The discipline of making those payments also meant that after we paid off the house, I continued to put less, but still significant amounts into investments. And, of course, there’s nothing like not having the mortgage payement–it gives one a sense of freedom from one large bill each month, so you can absorb extra expenses, or think about working for less income…
October 1st, 2007 at 8:24 am
It’s hard for me to consider these programs to be anything more than a scam. Sure, it can work in theory, but you can make extra payments on your own. There is no way it is worth $3500. Someone simply devised a good system for taking money from people who have just enough to be dangerous, yet not enough discipline to get out of debt on their own.
October 1st, 2007 at 8:29 am
Um, maybe I’m missing something here (and I definitely do not claim to be the most knowledgable on this subject), but if you have an extra $3500 to spend and know you don’t have the discipline to prepay your mortgage without help, why wouldn’t you just use that money to refinance to a 10 or 15 year mortgage?
October 1st, 2007 at 9:08 am
Of course this is a scam. 3500 dollars for what’s probably nothing more than an Excel template?
It’s also highly misleading about what you are actually doing with your money or how this works in reality.
If you have the discretionary income, and want to pay down your mortgage quickly, the easiest way to do it (assuming you have no discipline) is to set up an automatic payment plan directly with your mortgage company (or via bill pay on your bank’s online banking) and set the amount to be slightly above your usual monthly payment so that it adds up to the number of extra payments that you want to make over the course of a year.
October 1st, 2007 at 9:15 am
The easiest way I heard of to pay off a mortgage faster is to round the payment up to the nearest $100 to start, then add $1 or $5 or $10 a month. So a $1465 payment becomes $1500, then $1501, then $1502, et cetera.
The idea being that if you can pay $1500, then you can afford a dollar more. Or $5, or $10.
If you’re doing automatic payments, then bump it up each year. Not as gradual, but same idea.
The “Money Merge” account reminds me of insurance / property tax escrow accounts. Yes, you can pay the nice bank the extra each month so they will have money on hand to pay your property taxes & insurance - but why let the nice bank earn interest on your money? Why risk that the bank will screw up send your premium to the wrong insurer or county? Just put the money into savings each month and you’ll have it on hand when the time comes.
October 1st, 2007 at 9:20 am
As an aside, HELOC as emergency fund is better than no emergency fund - but an actual emergency fund is better
October 1st, 2007 at 9:40 am
I read all of the above comments. I just wanted to share my experience with this program. I am a user of this program and have been for over 3 years. I have also worked in finance and banking for more years than I want to admit.
For those of you who have never used this program, please keep an open mind. A little over 3 years ago, I had the same opinion. “Why would I use this program, when I could do the same thing on my own?”. At that time, I decided not to get on the program. Then 3 months later, I over heard someone I know talking about what this program was doing for them. I asked if I could take a closer look at their situation. They were well ahead of where they would have been normally, and they said they also said they could do it on their own, but decided to get on it after they found out their financial planner was on it also. They also said that while they feel that they could do something similar on their own, they never would have.
Now that I have been on this program for over 3 years, I completely agree. This is something I understand and could probably do on my own if I had a lot of extra time each month. But I have found that using this program completely changes your thinking. Sorry for the long post. I just wanted to share my personal experience. As a veteran in finance, I personally recommend this. Don’t take my word, do your homework to see if it right for you. I am not selling this program, as you can see I have not included my contact info.
-Thanks!
October 1st, 2007 at 9:40 am
This sounds like a complicated way to do it. There seems to be too much room for error too, which could land you in a load of trouble.
Like you said, there are ways to do this for free. You can do bi-monthly payments, or even get a 15yr mortgage. Or just send a lot of extra payments in to the company yourself marked with “principal payment” and do it that way.
October 1st, 2007 at 9:55 am
I’ll make a littlebusiness proposition right now: For a payment of just $2500 ($1000 off the original offer) I will call you once per month and yell at you to pay extra on your mortgage. I will throw in a monthly call to make a budget and another to stick to the budget for free!
Lol.
I’m guessing these people hope that if they HAVE to do it they’ll be more likely to do it. So I’m willing to get in on the business and intimidate with random phone calls.
October 1st, 2007 at 9:59 am
“The consensus on the web seems to be: yes, these programs can help you pay down your mortgage quickly; however, they don’t do anything that you could not do yourself for free.”
I was one of the folks sending you emails on this topic.. and the above is pretty much the conclusion that I came to as well, searching on my own. But I’m very glad to see that you & others have come to the same conclusion. Thanks for your extra effort on our behalf!
October 1st, 2007 at 10:10 am
With many thousands of satisfied homeowners on this program across the Untied States, there must be something to it. My neighbor who is the vice president of one of the nations largest banks is on this program. He has nothing but positive things to say about his experience on the program.
October 1st, 2007 at 10:15 am
I have not heard of or used such a product, but it sounds to me like the “software” is actually a mask for getting people to use the HELOC trick and increase their principal payments. I know that 11 years is doable, especially if you start paying down the principle in your first year. I played a game with myself on our mortgage: I would pay double the principle amount every month. In the first months it was just an extra $5 or $10, but it rose each month by just a little. Also, when there was “extra” money, like a bonus, tax refund, or Christmas gift, I applied as much of it as I could to the principle. Using this “system” it took almost exactly 11 years to pay off the house and it did not require a HELOC or a $3500 piece of software.
It does interest me to know if the claim is true that HELOC interest calculations are more favorable to the home owner. It makes sense that they would be (since these are not fixed length mortgages and therefore interest cannot be calculated and frontloaded as it is on traditional mortgages). Were I just starting to pay a mortgage I would be now be furiously investigating the claim to see if it would help our financial situation.
_______________________________
Wishing you a prosperous future,
Daiko
October 1st, 2007 at 10:44 am
One thing to bear in mind is that mortgages (and the laws that govern them) vary widely from country to country. A MMA is very much a variation on the “one account” mortgage that’s used in Australia and the UK; similar mortgages are available in Canada as well.
Personally, I am more in favour of simply paying down a mortgage by sending in extra payments on a regular basis, but I don’t need somebody else to impose that discipline on me; I can do it on my own.
October 1st, 2007 at 11:24 am
If I am not mistaken, there are 2 MMA offers in Canada now
Manulife One - $14/month fee
Canadian Tire - no fee
In short, one big HELOC that you use as primary account, and pool every penny possible to pay the mortgage down faster, even at prime rate - Instead of paying fixed mortgage, and save at 4+% at the high savings account
Note: you need strong principle to NOT withdraw from HELOC easily!
October 1st, 2007 at 11:25 am
I have one of these mortgages (although there was no $3500 “software fee”. maybe that is new.
Yes, you can pay off a standard fixed rate mortgage early by paying extra against principle, but how much over do you pay? You need to be conservative in those extra payments, because they’re gone (unless you get some home equity loan…). You have to guess “how much will my upcoming emergency cost?” and keep that money aside.
With these loans, you can put it all against the house, paying it off as early as possible barring emergencies, yet having they money available if you do need it.
It is dangerous - if you’re not disciplined you can spend too much of the money in your account since there is no mortgage payment, and you end up in the hole. That’s why you usually need pretty good credit to get into it in the first place.
You can probably do better by investing the money and managing it, but that’s too much work for me. This is easy, it lets me pay off the house as quickly as possible, and I still have emergency access to the funds.
October 1st, 2007 at 11:28 am
I have a friend who was refinancing and without ever discussing it with her, the mortgage broker was setting her up with this sort of deal. She figured it out in time and changed plans to a normal 30-year fixed-rate, but I personally would have walked completely out of the office when I found out I was being railroaded into something I didn’t understand and that we’d never discussed.
If the situation really happened like she described, it’s probably happening to lots of people, and that may explain the upswing in questions about it.
October 1st, 2007 at 12:12 pm
Like many other commentors on this article, this seems like a product with no value add. I smell a SCAM.
October 1st, 2007 at 12:21 pm
Not sure why you’d want to increase your illiquid, high transaction cost, low return savings (your house) instead of your fully liquid, low transaction cost, historically higher return savings (stocks/bonds/savings accounts).
October 1st, 2007 at 1:27 pm
Is anyone here open-minded? I don’t have an MMA, and I’m not selling them, but I have a friend who has one and absolutely loves it. Also, I have looked around and all the negative comments always come from people who are simply making assumptions and people who don’t have a Money Merge Account and never plan on getting one.
Is this a scam? I don’t believe so. Is it for everyone? Absolutely not. If you can do this on your own, then go ahead and do it. I wish you luck no matter what decision you make, because in the end everyone wants the same thing . . . their house paid off. (And if you don’t want your house paid off, I still wish you luck.
TTFN - Ta Ta For Now)
October 1st, 2007 at 2:11 pm
You do not need to buy a product for something you can do yourself
October 1st, 2007 at 2:50 pm
As of October 15th 2007, the only information available to be put on web sites will have to be identical to what is on our home page violators will be suspended for 30 days with out pay. You may create your own skin, look & feel but the content MUST be identical to our home office retail site.
This site is not in compliance and you must contact me to obtain the most recent copy of the agent guidelines.
866-307-3201
Thank you
Amber Bishop
Compliance Coordinator
October 1st, 2007 at 3:45 pm
Yes, it is a scam if they are charging you big bucks for the service. And I wouldn’t be shocked some of those promoting it in comments are those being paid a commission to sell it.
I’m sorry, but break it down: All you are doing is spending all of your discretionary income on paying off your mortgage. To say, “With these loans, you can put it all against the house, paying it off as early as possible barring emergencies, yet having they money available if you do need it,” is to say that you can always borrow money if you screwed up and needed that discretionary income. At interest of course.
The notion of taking advantage of the average daily balance to save on the interest just doesn’t compute into big savings. First, you have to have interest parity between the mortgage and the HELOC, at a minimum (and preferably a HELOC that has a lower interest rate). Look around. If you have low, fixed mortgages, I’m gessing you won’t find one. The HELOC at my local banks is already 3% higher than my mortgage! It isn’t rocket science that borrowing money at a higher interest rate to pay off a loan that is at a lower rate isn’t the way to successfully play the interest arbitrage. But assume there is an interest rate arbitrage to take advantage of, calculate it out and I think you will find that the amount of interest you earn on the float is modest at best. And then compare that to the fees they intend to charge you for the software/service and I suspect you will be in the hole every time.
The only way this works is because of the power of making higher payments. It has nothing to do with the float, really. If you are worried about “emergencies” as those promoting thse try to suggest will solve, set up an emergency fund or set up a traditional HELOC and not use it until the emergency happens.
Just make sure you don’t go with one of these and find yourself paying 3500 for what amounts to maybe 500 bucks of interest savings based on the float.
October 1st, 2007 at 3:48 pm
wow,
I’m Australian, and I think I have what you’re talking about (our jargon is a bit different).
We call them offset accounts - any money you have in the linked account ‘offsets’ the interest on the mortgage. so if your mortgage is $100k and you have $60k in the account, you only pay interest on $40k.
thats it. no swanky software. you still have repayments into the mortgage, and while it’s possible for us to redraw from the mortgage, it’s still a separate account.
anyway. there are three situations my friends are in where this sort of account is a good thing:
- my friend Pete is part of a farming family. they get a bulk payment for their wheat at the end of the year, and a portion of it sits in his offset account until needed - effectively knocking out 80% of the interest on his loan.
- we are planning an ‘income-free’ period for 3-6 months next year. we are madly paying into our offset account at double our minimum repayments. it’s saving us interest in the short term, but will also be the fund that all the repayments go from next year.
- if you have a rental property in Australia, the interest on the loan is a tax write off. And it’s calculated on the balance of the loan, not the interest repayments. If you have the money in the offset account, instead of the mortgage, you’ll be able to write off more interest than you pay. (or so an account friend assures me)
October 1st, 2007 at 7:39 pm
I just ran into this posting. I use this product and it works better for me than any previous attempts I have made to pay my mortgage off early.
Just the educational features in this program were worth it. This product goes beyond banking tools. It incorporates educational tools which follows the individual changes in your day to day finances. Type in the words “behavioral economics” in Google and you will get a better understanding behind this. Just my 2 cents.
Thanks,
Casey
October 2nd, 2007 at 7:51 am
Wow, I’ve never heard someone suggest this is an example of behavioral economics. As someone who studied the discipline, I have to say that’s a stretch.
Look, here’s the simple thing to ask any promoter of one of these products: How much will you save if you assume that you have no discretionary income at all?
That’s the bottom line question. Because the answer to that will give you the true value of the program from a savings perspective. And it is that that you should compare the costs of it against. Not how much you will save because you are pre-paying your mortgage. Notice most of these programs simulations refuse to let you enter that math (they require you to be a saver) so they can hide the ball on that.
If you need the help disciplining yourself to pre-pay, fine, pay for what you think is valuable. But with the plethora of free tools, automatic bill pay through banks, etc., I don’t see why 99% of people would go for this except because they are fooled into thinking theirs some magical gimmick out there that can reduce their mortgage without actually using their dollars.
October 2nd, 2007 at 11:19 am
I think the Australian poster explained it best.
This mortgage allows you to put cash into an affiliated account that offsets your outstanding mortgage balance and you are not charged interest on the equivalent amount in your mortgage. The twist is that you can pull that cash out if you need it, effectively ‘reborrowing’ the money. This makes more sense than letting cash sit in a savings or checking account with a lower interest rate.
If you have a HELOC, you can start prepaying your mortgage with a lump sum from your emergency fund since you can borrow that sum back from the HELOC. You then rebuild the emergency fund with the money you would have used to prepay the mortgage. Each following year, you use that rebuilt emergency fund to prepay the mortgage for the next year, and so on.
Paying $3500 for this setup is theft.
October 2nd, 2007 at 5:31 pm
I don’t understand why you say I should specify that extra payments must be applied on the principal. On what else could it be applied to ?
October 2nd, 2007 at 9:36 pm
Wow, sure are a lot of comments from people who apparently have not personally checked out the MMA. Pontificating about sending in money you cannot afford to send (and what amount would you send in each time?) is ludicrous. So many people wish to sound smart…look into it and get educated.
Impugning the credibility of some postings that are positive about the MMA is silly. Get your free analysis and see what the numbers come back with. THEN, see if you can match that pay off date and interest savings. If you can’t then cease with the uniformed blather until then.
As for the person who stated that he designed an Excel spreadsheet that did the same thing as the MMA: get real. I’ve heard that so many times but each time I’ve examined them they were miserable failures.
Is it for everyone? No, of course not. Is it for most people? Clearly yes. Is it about discipline? Not really. All the people who are prone to blowing a HELOC to the wind with wanton spending habits have already done so. This is for people serious about getting 100% out of debt—note that the MMA pays off the mortgage last of all. To all the nay sayers: stop yammering and get educated.
October 3rd, 2007 at 9:11 am
I don’t understand how this sort of thing could help, since mortgage interest is calculated and compounded monthly, not daily. It’s not like paying off a car or a credit card, where the average daily balance really does come into play.
Or maybe I’m wrong.
October 5th, 2007 at 6:42 pm
Daniel,
You just nailed it, learn more about the product and it will all make sense. Before purchasing the product consult a financial planner, run the numbers.
October 6th, 2007 at 3:34 am
Jason, that’s just it. I’ve looked into them. Perhaps I’m just too much of a skeptic, but it doesn’t make sense to me.
Also, maybe it’s just that I’m paid monthly, so all of the gimmicks would not work for me that would work for those who are paid weekly or bi-weekly.
October 6th, 2007 at 8:48 am
The comments made are nothing new, nor will these points of view stop from those unwilling to do some deep thinking here.
The methods for paying off mortgages have always been around. So why haven’t the majority of homeowners done so? Why all the mortgage problems and consistent debt and negative savings in the country?
Because we simply point a finger with one hand and say it’s one way, while our other hand does the exact opposite.
Consider something:
Billions of dollars in profit are made on all of us each year. The mortgage industry is based not just on math—but on HABIT.
We know for a fact that we, as homeowners, refinance every 5-7 years. The industry accurately banks on it. That’s not math–it’s a character flaw in people, worth billions of dollars.
So while posters are saying the same old ‘I can do this on my own’, know that IF you can, you are NOT the rule—you, in fact, are the exception.
Try throwing the ‘Habit Factor’ and the ‘Life Happens’ factor into the mix then see if you can actually do this on your own–at least as well as my clients do on a program with all the support.
October 7th, 2007 at 9:42 pm
I see a lot of opinions but have you who have left opinions either way, actually viewed or listened to how this is done?
I have nothing to gain or lose but I’m considering this. I’ve been talking/listening about it with United First Fed and, after listening to exactly how it works it appears to me that nobody on here has actually learned more about this than just having heard what the general gist is. There is so much more detail. I’d be interested in seeing opinions from people who have actually done this or have been thoroughly educated in the process, not just knowing the basic idea of it.
October 7th, 2007 at 11:09 pm
I was very skeptical as many of you are. I took a chance because I am one of the multitudes that could not get my financial stuff together. I’ve tried for nearly 30 yrs. For me this program is a god send. It has enabled me to focus like I have never been able to focus on my finances not just my mortgages. In short, we’ve stopped the financial leaking/flooding.
No, MMA is certainly not for everyone but it was perfect for us and our life situation.
It was my wife that first saw the possiblities, I just scoffed and was uspset that she had gotten us involved in what I to considered a scam. That was until I decided to take a good hard look at the program. It is NOT a scam for people like myself but rather a very good tool that has given me a target date. We have been in the program for more than three months and we love it.
Our situation is such that we have 6 years and 3 months to payoff the 1st and the 2nd mortgages. When we realized both of us could retire after the above time, it was a very emotional moment.
October 8th, 2007 at 8:33 pm
Check out this Channel 3 in Las Vegas news report. http://www.sydneyfinancialgroup.com/articles/nbc-report.php
October 9th, 2007 at 7:05 am
The funny part about that video Mark—is that it’s on Sydney Financial, and yet it has nothing to do with them—except showing that these principles work.
Sydney Financial tries so very hard, if you watch Google and paid adverts–to ride on the coat tails of United First Financial, and they are not the same program.
Watch that video closely, watch the screen, and you will see the tab saying “Money merge Account”. Thats UFF’s actual software–though it’s an older version.
Again–funny that Sydney has it on their own site. The story was not about the concept–it was about our specific program, but the News Station could not/would not promote a specific program.
Keep all this in mind when watching the video, and who’s promoting the video.
Daniel,
Talk to an agent who has substantial experience with the program. Though there are many UFF agents out there—the majority of them simply cannot correctly teach you why it works. You can talk to any of our staff here at The Jubilee Project, and we can do so–without the pressure to purchase the program.
We want to educate first.
http://www.thejubileeproject.com
October 9th, 2007 at 7:48 am
Mark, let me echo the previous statement about the NBC Channel 3 news clip: it is about UFF’s MMA, not Sydney’s product. You can tell by looking at the screen shots of the software. CMG and Sydney both use that in their presentations–but they both differ significantly from the MMA. Another example of the confusion out there.
My experience is that most UFF Agents can properly explain the program and why it works…sad to see the the in-house parsing by Jubilee.
October 9th, 2007 at 8:25 am
Steve, just offering help.
If someone is needing information, how to you suggest they get it?
Wish for it, perhaps?
I suggest you go from site to site anywhere on the web, and see how much information you will find in detail.
We have no problem, nor feel any shame in offering help in sharing what we know about the program. People matter to us, and if you don’t want our information, simply don’t click on the link.
Easy enough.
October 9th, 2007 at 8:51 am
Jamie,
Jamie, no one said there was a problem with you giving information; the issue is with your comment:
“Though there are many UFF agents out there—the majority of them simply cannot correctly teach you why it works. You can talk to any of our staff here at The Jubilee Project, and we can do so–without the pressure to purchase the program.”
You are stating that other UFF agents are ignorant and your team is not. How can you know that about the first? It causes me to doubt the second. Please do not disparage other agents you cannot have knowledge about. We’re a team, remember?
October 9th, 2007 at 9:44 am
Ahh, Steve, you mistake my intent and I did not phrase myself well.
I apologize.
Can I say I know these people? No.
Can I say I name them all? Of course not.
Can I watch trends, watch what policies and procedures are enacted by corporate? Yes, I can.
Is your drive to protect the agent—or to protect the client and and program?
Mine is the latter.
I believe you will find that is the stand of UFF as well.
Daniel said he has looked into the program, he has looked into it…and it doesn’t make sense. What happened to the ‘pro’ who showed him? Do I take that Daniel is ignorant, or the agent?
I naturally assume he needs someone with more experience to explain it until he DOES understand it. Is that a slam? I certainly don’t think so Steve.
It really has nothing to do with UFF, this program or it’s validity. You are right to call me to smooth my words out. I am known for bluntness in an arena where many desire a soft touch.
However Steve, I did NOT say my ‘Team’ is not ignorant. My team reaches through all 50 states and that was never implied. I stated my “staff”, which I have trained personally,can teach you correctly why the Money Merge Account works. A handful of people who all sell this and teach it, every day…full-time.
They know this program inside and out. They are not ignorant.
Everyone has a learning curve. I had it–you had it, everyone does. However, not everyone is equally qualified to answer questions right out of the gate, and some I know personally still cannot explain all the aspects of the program after 6 months to as year.
It sounds like Daniel needs more than a DVD to explain it. If you have that knowledge—by all means, you explain it. I certainly wouldn’t mind.
Be careful in judging me as well Steve–Jubilee promotes other agents all the time, including from our site–even agents NOT on our team. Because, as you properly said: we area team.
If you want to discuss this issue further, I suggest you contact me personally, or even call me if you like.
To all the readers, I hope that clarifies my intent.
October 9th, 2007 at 8:05 pm
I suspect it might be more effective to employ early in a fixed interest rate period. Once they have you trained, they have your money even as the trick becomes less useful…
I would also be concerned about any fine print that allowed the bank to reduce the credit limit allowed on the HELOC at their discretion. If you happened to have 10-20,000 dollars available (in an emergency fund, say) and used that to pay down your mortgage because you had the line of credit to fall back on if you needed it and the bank later decided you were a risk and unilaterally reduced your credit line, or you missed a payment somewhere and they then were allowed to RAISE the HELOC interest rate…
In the US, most first mortgage loans are non-recourse - if you go through foreclosure, you walk away and the bank takes the house and tries to get their money back. For a recourse loan (like most REFINANCE and also HELOCs ?) they can continue to hound you if there is any shortfall in the banks recovery of the loan after the house sells.
Might also be differences in the new bank-friendly bankruptcy laws between home loans and HELOCs.
October 9th, 2007 at 9:03 pm
All I understand the link is from Sydney Financial the reason I put that link on this thread is cause it cannot be accessed through UFF any longer. The idea is for people to see that this sort of concept works.
October 9th, 2007 at 9:08 pm
By the way I am a client not an agent.
October 9th, 2007 at 9:56 pm
Matt, one of the wonderful aspects of this program is that the rate doesn’t matter on the HELOC. It’s based on an average daily balance and should be a variable interest rate–though we can work with a fixed.
As a matter of habit, I run a clients numbers at the current rate of the industry, and then another run of the numbers at 19%.
The pay off is usually only 1-3 months further out at the most. Very impressive.
October 12th, 2007 at 10:05 am
My experience in researching the MMA program shows that paying extra $$ towards principal each month is not as effective and using the MMA. The MMA also uses the power of interest cancellation because the HELOC is based on the daily average balance. I’ve been on the program for a few months now. So far it is working quite well. I have decreased my 1st mortgage by $13,000 and am paying a little bit of interest on the average daily balance of around $6,000. If I stopped now, I would have already earned my $3,500 back…but I’m not stopping. This is working way better than the $100 extra dollars per month I have been sending for a year. I believe the program works especially well for my family because we are paid weekly. I would assume that the program is far less efficient for someone who is only paid once per month.
October 13th, 2007 at 1:50 am
The product can work, but it is not for everyone. As for the company, they are milking this for everything they can using MLM, agent fees, marketing material fees etc…. Since when does a reputable company charge their agent for a consumer brochure? That is the reason I am now a former agent and recruiter. Something just smelled “fishy” and “short-term” about this company if you know what I mean?
Contrary to what some might think. The MMA does take effort and discipline.
The people that the MMA can work for probably are financial savvy and disciplined enough to accomplish the same thing on their own. For everyone else, the MMA will only work in theory, as most people will give up using it after just a few months. Again, I say MOST people.
In the long run it will hurt people more than help them.
With an open equity line of credit, you are inviting these homeowners to get into more debt. We are a consumer nation. Shopping spree anyone? Why not, I’ll just “MMA” my bills. LOL!
Give somebody credit and they will take it. That is why this product is not for everyone, just like the ARM loans were not and we all know what is happening with that now.
Unfortunately, our country is not ready to be debt free just yet….and may never be ready.
When/if we are… we wont need a $3500 software sold by a mortgage broker to get out of debt.
October 13th, 2007 at 12:52 pm
No, David…I don’t know what you mean, and I certainly don’t give much credibility to your remarks. Nor will anyone with moderate intelligence.
Reputable companies everywhere charge for their marketing materials—when those using them happen to be independent business owners, which is what we are.
We are also free to NOT use their materials and create our own within certain guidelines…something franchisees are not allowed to do in many respects.
Being self-employed for nearly 20 years, I have had to pay for everything. I make a profit on all I do, and there are costs associated with making those profits. We are not employees David, or I would agree with you on that point.
Sure the Money merge Account takes effort and a measure of discipline. This isn’t fairy dust. It’s not a magic pill. However, it has the highest success rate and user rate of any program I have personally studied–over 98% userability. That means after a year…not a “few months”, people are still using it and getting ahead. Get your facts straight.
Now, frankly David, I believe you to be a liar. I hope you are, and not just a bitter individual. I’d like to think you’re simply another ticked off opponent who’s mad because we took your clients from you, to save them from debt, instead of creating a deeper hole through refinancing.
Either way, your comments shouldn’t bother any reader, because you have no credibility.
-You haven’t made an accurate statement about the program in any way, displaying your amazing ignorance of this program, thus I doubt you are an agent (or were).
-If you WERE an agent, and now you’re bashing it, why would someone listen to an individual who ‘jumped on the bandwagon’, not using their intelligence to first check the opportunity out? Why didn’t you investigate this before signing on the dotted line? You screwed up once, what makes anyone believe you’re not screwing up again?
-If you were an agent, but now defected, and you apparently don’t understand the program or how it works—what gives you any credibility, even with your own opinion when it comes to describing this program?
You don’t have your facts right David, and certainly don’t know about the company you ‘allegedly’ were a part of. Our track record is impeccable. Our results guaranteed. If you want to prove your credibility, share with us your UFF number, and I’ll stand corrected.
Otherwise, you’re simply not believable.
ANYone can get a credit line without us, David. Don’t point a finger at UFF.People who make bad financial decisions can do so again, regardless of a program—that’s not our fault, nor inherit in our program. However, I have seen several who said they can “do it on their own” do exactly what you predicted.
Why? Because they don’t know how to maintain the variables in their financial lives. They didn’t REALIZE that those who say our program is nothing but a “excel spreadsheet” have all assumed that the ANALYSIS SOFTWARE was the “client software”. LOL. Uh–no.
Our analysis software IS a glorified excel spreadsheet of sorts, but that’s NOT what the client buys. The actual software is completely unique and we have created the industry standard in this area. So, assumptions are made and people walk off to do their own things–and fail.
We seem to have more faith in the homeowner than you do David, so again, if you WERE a UFF agent, I’m very grateful you walked away. Your ignorance is astounding about this product and program…and your comment about the country “not ready to be debt free” just sends a cold chill down my spine.
People deserve the right to choose for themselves. I believe in people. You should. People always have the possibility of falling. Again, this has nothing to do with our program—it’s inherit in human nature David. Sure, they may fail…but what happens if they don’t?
The great thing about this program, is that there are many ‘diets’ out there. Ours works. People stick to it. People win and win big.
Thank you for walking away from this opportunity David, so that those of us who care for people, their welfare and helping them get out of debt can do their job.
-Jaime Buckley
The Jubilee Project
PS, Steve–David here proves my point exactly about agents. Again, if he WAS actually an agent.
October 13th, 2007 at 8:00 pm
Jamie,
Sorry I have not been on line lately, business is great (gotta love that warm market) and even though I’m new, I’m very busy.
I second everything you said–except your PS: I would not impugn our UFF agents’ good names by linking them to David’s remarks. On one hand you dismiss David as a fraud seeking credibility by claiming previous employment with UFF; on the other you hold him up as an example of why people should go with Jubilee. Logically that’s call a non-sequiter, bordering on an ad hominen attack. Personally, I think your insights are spot on: he’s a disgruntled mortgage person who is unhappy that UFF does not require a ReFi with every MMA. Other products do and that is the basis for such postings, as you so adroitly pointed out.
David, your experiences do not match my experience of UFF and the MMA. The company is made up of wonderfully helpful and intelligent people who client’s can and do depend upon (Jamie, addressing our previous conversation).
Moreover, the capability of this software is so far beyond Excel that they do not reside in the same software genus. It’s akin to comparing an abacus with a PC.
I too tried to create an Excel to emulate MMA results :). But just take a moment to think about the complexity of managing the interest rates of both the First and the HELOC against different monthly spend rates and fluctuating income streams and THEN try to figure out how to aggressively pay down the first while being conservative with the HELOC balance.
Jamie is correct about the HELOC interest rate being irrelevant. I just returned tonight from signing a client; I ran their analysis at the 9.6% HELOC they’re getting and again at 19%. The minor time/dollar difference represented noise level money. Why and how? I’ll use a couple of examples to make the case. (BTW, they had reviewed Sydney’s offer and went with UFF/MMA—if you want the details I’ll happily divulge the blow-by-blow).
The MMA avoids the potential trap of CMG-like products by dealing with the existing loan rather than refinancing the entire loan it into a “super HELOC”, subject to the variables and vicissitudes of the financial market with its fluctuating interest rates. So let’s say interest rate go nuts and head through the ceiling. Would you rather be on the MMA or a CMG-like product? Put succintly, 21% of ~$5K is much less than $18% of $300K…review the competitors’ websites for more info. The point: the MMA moves incrementally to affect pay off of the First Mortgage, never exposing the client to more risk than their current spending habits and income allow. They need to follow the prompts, nothing more. The software is necessarily complex on the backend—it has a very tough job to do, well beyond the capabilities of Excel (imagine the macros and trying to debug that line of code!)
Conversely, the software must present a use-friendly face to the client or they won’t use it. When good products come along that can address multiple complex situations but present the results very simply we call that “Software Elegance” (we use that term at HP). The military calls it a “Force Multiplier.”
It takes a very powerful piece of software to address multiple types of mortgages—while the brainless method is to simply refinance…which is also another way to earn a commission for LO’s. You don’t have to scratch a mortgage officer very hard to reveal that…I find that is usually at the base of most complaints coming from that quarter.
Kind regards,
Steve
October 17th, 2007 at 2:47 pm
$3500 divided by 144 months(12 years pay off) =$24.30 to be in touch with your finances monthly. What do you spend $25.00 monthly on???
October 19th, 2007 at 8:33 am
Actually, my group recruited dozens of agents who did some business. I am still technically a UFF rep, buy we are no longer interested in marketing the product to more agents. We chose to pass based on many factors.
The owners of UFF might all be great people, but the way they are marketing the product takes away from their credibility. As for the product, like I said.. it will only work with less than 10% of the public in the long term. As a financial professional, I would not sleep well at night knowing the product I sold my client has a 90% chance of not working for him based on MANY factors which I have stated before.
I am not bitter Jamie. I run a very successful company with a large distribution team and have done so for years. However, after working with UFF and noticing how greedy they have become in terms of trying to make money off their agents, we chose to pass and spend time on more proven products with carriers who support their agents in stead of putting on “ra ra” conventions. Come on Jamie dont deny the true meaning of that convention. It was almost funny.
FYI, ALL of the companies we currently work with DO NOT charge for marketing material. That shows confidence in their product.
UFF supposedly does over 1000 new apps per month. That’s over $1,000,000 a month in revenue. (they keep $1000 from the $3500). I am not even counting the money they make off new agent fees. How much of that money have they put back into agent support or even a national ad campaign so when you sit at the kitchen table with a client they have actually heard of the MMA??
The truth is you ARE self-employed, but you have committed to sell a product that is not yours. The owner of the product should act as your partner and provide support to the better producers and not saturate the market with anyone willing to pay $175 to “start a business”. THERE IS ABSOLUTELY NO VALUE TO A UFF AGENT CONTRACT. Anyone can get one. That says a lot about the company.
This MLM concept and folks contrary to what some “branch managers” will tell you…United First Financial is a true Multi level marketing company. Anyway…. this MLM concept is good for the company, not for most agents or consumers.
Look at the info you get from search engines. If you think those “recruiting” websites make UFF and the MMA look credible, then the coolaid you drank at the home office (Jamie) has really worked on you.
As for the MMA being 98% effective. It is still too early to say. To evaluate a good finacial product one needs more than 18 months…and dont tell me they have been testing it for 3 years. I have heard the pitch before. I guarantee A LOT of the people who bought an MMA last year are not using it today and most were probably former agents. The public is not as interested in the MMA as people who are looking for new business opps are. I know you know what I am talking about.
UFF has done a great job recruiting without spending a dime. Absolutely excellent. They are making tons of money and will continue to do so. However, 98% of the agents who get recruited will not last 10 months. That is not credible.
As for taking a punch on my intelligence without knowing me takes away from yours Jamie. I believe you are a smart hardworking person, but you are buying your own BS my friend. I had enough smarts to see that the company is here for the short term. That is why my organization spends more time marketing with carriers and products with a proven track record.
Good luck to you as I know you try very hard, but I’ll bet you will not be selling MMA’s three years from now and not because you succeeded with them.
October 19th, 2007 at 12:18 pm
David,
A lot of comments, a lot of opinions—but explain to me how you come up with your facts and how you can “guarantee”:
“I guarantee A LOT of the people who bought an MMA last year are not using it today and most were probably former agents. The public is not as interested in the MMA as people who are looking for new business opps are. I know you know what I am talking about.”
No, frankly I don’t know what you’re talking about. Where do you get this data to back up your ‘guarantee? How can you make such statements with any degree of authority? Seriously David, come on…
The funny thing about the web is that people can simply lie. I can, you can—there’s no credibility unless you show yourself. Maybe you’re who you say you are—maybe you are the president of General Motors…maybe you’re working from mothers basement…how can we tell? You can just as easily be a disgruntled person who couldn’t work this business, as someone who just wants to bash for heaven knows what reason.
You have my address from the link, you have access to me website, my phone, my business address—all of it.
…where are you?
Put the facts behind your comments bud. Show me how you prove that this program:
“As for the product, like I said.. it will only work with less than 10% of the public in the long term. As a financial professional, I would not sleep well at night knowing the product I sold my client has a 90% chance of not working for him based on MANY factors which I have stated before.”
Where do you get your stats? If it’s fact—the people you’re trying to “save” should know all this. I don’t claim to be a financial professional. I used to be a cartoonist. No secrets there. Now, maybe that makes people trust me less, maybe not.
All I do, day in and day out, is tell people what this program does for myself, my wife and my children. It has been such a blessing, I started getting my family on it. Then my friends. It’s helped every one of them so far. That, my friend is conviction, fact and motivation.That’s what keeps me going and I only tell readers and potential clients one simply thing:
I personally don’t have all the answers. Maybe I never will. I don’t know how my car works either, but I can drive the blasted thing. If I don’t have an answer, I will tell you. At the same time—if I don’t have an answer, I know where to find it, and if you can respect that kind of honesty, I will do my best to serve you.
David, some people can’t handle that—-many people love that honesty. I make a full time living at this, being of service, because it works. Day in and day out, it works.
Show me the facts. I get mine from United First Financial, and they have the actual guarantees. They spend money day in and day out, and I see this from going to corporate and working with corporate—sponsoring events and working on/in the professional fields. To educate and spread the word.
They create productions, have legal fees and costs you and I are not privy to, so how can you, in all honesty, make ANY judgment on what they make or should make? You’re way out of bound buddy. Again, you don’t quote facts—just an opinion.
UFF bends over backwards and in constantly improving and expanding—which costs are exponentially growing each month. You would know that if you were, in fact, plugged in and active.
My question to you, which floors me about your mind set is: why is it so bad for UFF to make a profit? Why is it wrong for ANY company to make a profit. They give away over 70% in commissions, and then take all the operational costs out of their end. You complain about their marketing materials, but most printing they do has a VERY low margin in it—because it’s outsourced buddy. I know that from fact because we do a lot of our own, and supplied much to our own agents by passing on the printer we used: http://www.overnightprints.com (great service, especially to design your own business cards). I was AT the Branch Manager meeting when they introduced the owner of the company they outsourced to.
So where do you get your information from?
It just doesn’t connect.
Then you say:
“As for taking a punch on my intelligence without knowing me takes away from yours Jamie. I believe you are a smart hardworking person, but you are buying your own BS my friend. I had enough smarts to see that the company is here for the short term. That is why my organization spends more time marketing with carriers and products with a proven track record.”
Again, where/how do you come to these conclusions? You have every right to have opinion about myself, my intelligence or my white fluffy dog—makes no difference. I’m trying to get down to actual facts and what actually “is”, not emotional barf and creative finger pointing.
Look, I know I’m not ’smooth’ in my comments. I call it like I see it. Some agents mistake arrogance with confidence, some people just don’t like me because I just say what I think. Steve above seems to be a very intelligent and good person and I’ve probably offended him by my communications and has responded intelligently. We may differ in opinion, but that’s ok. I see he’s honest and forthright with information, and his opinions are just that: opinions.
I respect that—even if I’m being reprimanded.
Everyone can see me David—show yourself and educate us on how you ‘know’ all these things, because David—you have again, proven nothing but another opinion, not fact. I’m not taking a ‘punch at your intelligence’ so much as saying you simply don’t make sense, and IN MY OPINION, any financial professional worth their salt, would back up their statements with fact.
I’m sorry you didn’t succeed as an agent, but that doesn’t take away from the actual ‘results’. We have hundreds of clients and all of them tickled, making progress and giving us thanks. That’s fact, not opinion.
It also clarifies the fact that you have not gotten on the product, so as to experience how it works. No doubt your next post will tell us you are debt free or have already paid off your home…
Please explain how you come to YOUR conclusions, and how, if UFF can’t claim anything about their program—you can? Don’t tell us, ‘because you know’. That means nothing—and on the internet, when you’re anonymous like this—you only have credibility with readers who have an IQ lower than a potato.
Does any other reader find that David’s comments just don’t make sense?
October 19th, 2007 at 12:35 pm
Oh, and David, as a clarification on your:
“I guarantee A LOT of the people who bought an MMA last year are not using it today and most were probably former agents.”
If you actually knew the conversion rate, you would know that many clients who GET on the program, THEN become agents, not the other way around.
Why?
Because they are shown that they are GOING to tell their friends and family about this program anyway. So why not make the commission on what you will do anyway—and then add it to paying off your home. Some remain agents, some don’t.
Personally, I don’t feel that takes away from the programs credibility at all. It stands on it’s own, and we have found a way to reward people for the efforts they were going to make anyway.
I see that as a good thing, not bad. Some professionals don’t agree, and that’s fine.
I LOVE the FACT that this opportunity is NOT exclusive to the “professionals” and anyone can gain a financial blessing. I am getting out of debt faster, personally—while providing better for my wife and children and being of service to those around me.
That’s one hell of a deal, if you ask me.
You just don’t see it that way.
Thats’ perfectly ok.
October 19th, 2007 at 8:55 pm
David,
Your lack of vision as to how UFF is changing the financial landscape of this nation is forgivable; but your vitriol in attacking it is unusual.
Why is it that some people, when they leave an organization, cannot leave it alone? You might review that with yourself. Wish Jamie good luck and focus on supporting your family. Why the grinding of the axe towards UFF? Because they charge “cost” for marketing materials? Because they charge $175 to get an agent on line with a replicated, fully functional website? Because they have elements of MLM–just like NY Life, Solomon Brothers and Paine Weber? Let it go bro and go live your life. And enjoy it. If you had to say something good about UFF, what would it be?
As for me and my family, the MMA has shaved years off our mortgage and there is no reason to see why it won’t continue.
Peace out,
Steve
October 19th, 2007 at 11:22 pm
Well said, Steve.
Thank you for the nice wishes—and right back at you. =)
-Jaime
October 23rd, 2007 at 2:34 pm
[...] Rich Slowly discusses them here in response to some reader [...]
October 23rd, 2007 at 8:47 pm
The fallacy behind all mortgage acceleration programs is that they try to prove that you can’t do it on your own.
I beg to differ.
I can prove that anyone can do the same thing on their own, without a spreadsheet, paying off their mortgage within 1 or 2 months of these software packages. Mortgage acceleration really consists of 3 parts:
1) Open a home equity line of credit (HELOC) at least as big as your emergency fund.
2) Taking all your idle cash - emergency funds and checking account padding - and pay down your mortgage immediately using that cash. Expect to use the HELOC as your emergency fund.
3) At the beginning of your pay down, make a one-time payment, the size of your total take-home pay, from the HELOC to pay down the mortgage balance. Then, when your paychecks come in, deposit the amount into the HELOC to pay down the HELOC balance. Then, as your bills come due, pay them from the HELOC. If, after paying the last bill, the balance of the HELOC is less than your total take-home pay, make a payment from the HELOC the size of the difference to pay down your mortgage. If the HELOC balance is greater, do nothing until next month, because this month’s bills are greater than your monthly income.
This is the basic algorithm of paying down your mortgage. 99% of the mortgage is paid from your excess cash, not the shuffling of money in and out of the HELOC. The shuffling lets you get the last ounce of performance for your pay down. The software packages will also tell you to delay paying your bills as much as possible to keep your HELOC balance as low as possible. Another suggestion is to use credit cards as much as possible and pay them off monthly.
As for my proof, I will be glad to trade spreadsheets with anyone.
I have no problems with these packages, as long as they admit they bring little more value than convenience and clarity to the pay off process. Just like I can change my own oil, but I prefer to pay a garage to do it.
October 24th, 2007 at 10:37 am
Jamie and Steve.
I am not putting down UFF guys. Read my posts, I said they are a great company that is making tons of money and will continue to do so. I just disagree with some of their distribution and marketing methods and think it is not in the best interest of their agents.
I am not bitter, read my posts. It is just that after getting to know and understand how the company works, we chose to pass. I have a good reputation within my business and decided to spend our time and effort on long term stable projects. Bascially, I dont want my agents getting hurt and wasting time.
I am not putting down MLM. Read my posts, I have been involved with MLM for years and currently run a large and successful MLM firm. What bothers me is that UFF was at first and I think still…denying that they are MLM. Go back a watch one of LS’s videos. Why were they?
Listen…I am proud to be involved in MLM. Our MLM structure benefits the hard working agents, not the just the recruiter and our carrier spends some of that money they make to getter the life of it’s agents. BTW, agents dont pay a dime to sell our products, they do have to get licensed through the state however.
Jamie attacked my intelligence when I complimented him on his hard work. Thats OK…he used to be a cartoonist and is now a financial advisor. Boy if it were that easy maybe next Wendsday….I could be an astronaut.
Listen, if you think you have something here…great…. run with it. I posted here because I thought that some people might want to know about my experiece and thoughts about the MMA having been directly involved and instead I got attacked by a couple of brainwashed convention goers.
My experience in financial services tells me…. 1) that the MMA will hurt more people in the long run than help them. 2) UFF’s actions lead me to believe that things will not last.
That is why we passed. There was no way of knowing until we got involved.
Let me ask you somthing guys. Are you making $200,000 per month? Because that is what the top MMA distributor is making. You know how much the top selling agent made? Less than $50K for the year. I have a problem with that imbalance. What that tells me is that most of the people buying this product are agents as they get recruited. Those agents then sell 2-3 MMA’s to friends and family and thats it. That is why the distributor makes so much money. UFF does NOTHING to help with branding or product recognition. I have a problem with that…if you dont…. then good luck to you both…what else can I say?
BTW…this is my last post, cause I dont this conversation will go anywhere.
Have fun.
October 24th, 2007 at 8:03 pm
Hi, I have found Mortgage reduction softwares with prices from 3500 dollars down to Mr. Harj Gills system (He is the orignator of all this from Australia)that sells for ONLY 199 dollars. I have actually tested the 3500 dollar system and Harj Gills 199 dollar system.
The same functionality provided in both as far as I could see. However, the U1st Financial is good if you love MLM are a good sales person who can sell to friends an family. Since it is MLM it has to have a higher price so many levels can get paid.
In the end, you can do this yourelf, however, you will NOT have the “what if scenarios”, and the financial dash board that works as great motivator -let me tell you it is VERY motivating to see that you can pay your 30 year mortgage in 7 years in a nice graph. Totally wortht 199 dollars. I could easily have paid 950 dollar for it without blinking since it will save us 187.000 dollars.
Actually I think it is cheap for what you get.
If you are a broker, banker, realtor or affiliate pro, I think http://www.speedequity.com now offers a great program with 300% gross margins. Not quite sure, but I think I heard something about it.
October 24th, 2007 at 8:10 pm
COMMENT ON blog comment 21. They can be disciplined and do it themselves. Great. But S/he is missing the POINT.
The systems enables you not only to prepay on your principal and eliminate intereste thereby, but also by ELIMINATING interest via smart cash flow system, by floating your current bill payments and borrow money “for free” of your credit card (VERY IMPORTANT to pay off every month though). All this saved interest compounded makes a BIG difference compared to just paying extra on your principal.
Check more out on http://www.youtube.com
http://ewatch.prnewswire.com/rs/display.jsp?a=31896-351831007-929498708&key=D|138220|S|0|x|351831007 - FORBES
http://www.americanmortgageeducatorsinc.com/In_News.html IN THE NEWS
http://youtube.com/watch?v=H_Zjq2CBiqQ
http://www.youtube.com/watch?v=NUWvQD9zbQ8
http://www.youtube.com/watch?v=P5ibPz5mIzE&NR=1 —- NBC CALIF, PROMISED LAND
http://www.youtube.com/watch?v=Nb2vJFAo35Y&mode=related&search=
http://youtube.com/watch?v=uzPN8WPIKlw
http://youtube.com/watch?v=vZbwxsFdVyc&mode=related&search=
http://youtube.com/watch?v=W0fpp5LR7Gc&mode=related&search=
http://youtube.com/watch?v=-OcEz9L8wjc
http://youtube.com/watch?v=-OcEz9L8wjc
October 31st, 2007 at 11:00 am
[...] October 1st: Is a money merge account a good way to pay off your mortgage? [...]
November 15th, 2007 at 7:07 pm
when i first saw the uff mma i thought “i can do that myself”. after doing some research i determined, using their 200k mortgage, 5k monthly income and 4k of expenses example; that if i tried to follow their method of paying a large sum every so many months they actually paid less interest than i did. i then just calculated what would happen if i put all my disposible income toward my principal and didn’t make payments out of my HELOC and I came out 3k ahead and paid off the mortgage 3 months earlier. that being said, i bought the program anyway. the software is like an expensive diet program that you buy, there is nothing in the program that you couldn’t do yourself but the program gives you structure, discipline, visual feedback and status, and some feeling of guilt of wasting money if you don’t stick with it. i struggled with the decision but finally decided that the software helps me with my goal of trying to simplify. the 3500 price tag is worth it if i don’t have to take time to figure out how i need to change my additional payments to principal when i have unplanned expenses that come up and if it motivates me to stick to the plan no matter how busy i get.
when i tell people about the mma i always tell them that they can do this themselves and they need to decide if the benefits that the mma provides worth 3500. i’m sure for some people the answer is no. if i was single or did not have kids, i would say no, it is not worth it.
for people who do not have a good grasp on how money and finance works it provides a level of comfort to doing something they don’t completely understand and most likely wouldn’t do if it wasn’t for the program.
bottom line… you can buy a hyundai or a mercedes, they both provide transportation and there is a huge descrepancy in price but if you feel that you get value out paying that much more for the mercedes then i’m not going to say that you are getting ripped off. the same goes for the uff mma, it works and if you feel that you get value for the cost of the program then buy it.
November 29th, 2007 at 8:28 pm
I love this program. It has motivated me beyond anything I could have imagined. The saint nailed it exactly for what it is. While it may not be for everyone it certainly has been for me. I now have only 5 years to pay off my mortgage, I started with 26 years.
November 30th, 2007 at 1:13 pm
What happens to your MMR, HELOC/MORTGAGE setup if you house drops significantly in value. Say 20%?
If I refinance my mortgage (which is currently 65% LTV) and pay down early, I can lose 20% on the value of my house and while I’m disappointed about that, it means nothing to my financial situation.
OTOH, if I create an MMR setup, don’t I have significant risk in the event of a 20% devaluation? Because then I’m upside down on my mortgage. Maybe no big deal if I ride it out, but that assumes no job loss or other catastrophe. Does this program put me more at risk if my house value and income drop together?
December 6th, 2007 at 4:40 pm
As stated above, folks can pre-pay their mortgage on their own, save more money, and get better results. Folks don’t need any software, just paper and pen to write out a simple budget.
As for psychological benefits, if any… there are plenty of low-cost alternative budgeting and personal financial mgmt software such as Intuit Quicken and Microsoft Money both of which sell for only $40, are more sophisticated, and backed by large reputable companies.
A HELOC is not necessary in order to take advantage of any potential interest rate arbitrage, which when properly analyzed is de minimis. Likely the HELOC balance transferring voodoo will end up costing folks more in total interest and finance charges not less.
If folks are looking to generate more interest income (discretionary income) from their cash accounts then there are plenty of ‘risk free’ FDIC insured alternatives to the HELOC balance transferring arbitrage scheme. http://www.google.com/search?q=online+savings+account
Don’t be fooled, financially these merge accounts in the USA are inferior to the many free and low cost alternatives, and they don’t replace the need for individual financial responsibility and self discipline!
Find out all the facts, understand your alternatives, and understand the financial decisions you are making. Taking financial advice from unqualified ‘software’ salesman is simply a recipe for disaster.
The interest savings come only from pre-paying principal with income that you earn… it’s not rocket science; it’s just simple common sense! Don’t waste your money and don’t be misled!
http://www.integramortgages.com/financialvoodoo
December 17th, 2007 at 10:19 pm
Most everyone on here is missing the point because you simply don’t understand how mortgages or how the software works. If you put a post on here, know what you are talking about and don’t post assumptions. I was showing a relative my loan balance from using the software and they couldn’t believe it so they did some research and saw these postings on your website that doubt the product so I felt compelled to write my results of using the product. I have had my original mortgage for 5 years and started using this software 3 years ago. My current balance after 3 years using the software would have taken 9 years to achieve by not using the product. Right now it shows that I have 10.4 years left on my loan. I also checked on doing a bi-weekly program but that only would have saved me about 6 years off my loan.
Here is the best thing. I called a mortgage broker and asked him to enter my original loan amount and rate and then figure out how much faster that I would have paid off my loan by sending in one extra payment per year. It only takes 5 years off the loan. Also, if I sent in $100 extra each month instead of one payment per year it would also take off about 5 years off the loan. The problem is that most people including myself don’t have a few grand to send in to their mortgage each year.
With this software I don’t have to “send in more” of my own funds. My paychecks go directly into the Heloc account and then every few months it instructs me to send in a lump sum from the heloc. But the next time I get paid it brings the balance right back down. Although it may not work for everyone, I researched the product, then bought it, and I am extremely happy that its working phenomenally.
December 19th, 2007 at 7:22 am
I sat through a presentation yesterday on the Ufirst product. Essentially, this will work. It isn’t because of the program although that is what UFirst wants you to believe. The reason it works is because you are using leverage. By controlling your HELOC balance, you can reduce the interest you pay on that account. HELOCs are calculated based on average daily balance. If you put your pay, bonuses, extra income, etc. into your account you can keep your daily balance low. So you don’t pay much in interest. In fact, the average interest is less than 3%. Then you can pull out an amount each month from the HELOC and pay off your mortgage or invest the money. The key is to put this money somewhere that pays more than the 3% you pay on the HELOC.
This program allows you to operate like a bank does. Your bank gives you 3% interest on your deposit and then they loan it at 6%. The spread goes straight to the bottom line and can compound, which is why the MMA accounts can really work.
I am not sold that you need their $3,500 program. I am going to look at creating a software program myself that does essentially the same thing.
December 19th, 2007 at 3:04 pm
@James
Please reread #64. Nobody says mortgage acceleration doesn’t work. If you want to pay for the kick-in-the-pants and the bookkeeping, more power to you, it’s your money to waste.
I emphasize again, the HELOC contributes very, very little, regardless the UFF claims. I can prove it.
December 23rd, 2007 at 7:48 am
Things that make you go Hmmm…….
In the U.S., most of our financial education comes from three sources:
1. Our parents
2. Our family, friends and colleagues
3. The media
As much as I love my parents, they are not financially independent, so they truly never taught or showed me how to be financially independent.
My family, friends and colleagues are not financially independent, so they truly can’t teach or show me how to be financially independent. Even though I’ve been a financial “professional” for 17 years, most of my colleagues are not financially independent (zero debt and job-optional).
The media is primarily controlled by people and companies who have their own agendas - to either sell us their products and/or control our behavior. To that extent, the media has done a tremendous job in accomplishing their goals. We bank the way they want us to bank, borrow money the way they want us to borrow money, and pay money back the way they want us to pay money back.
As a society, we have grown to accept as “normal”:
-Working 40-60+ hours every week, then directly handing over (via “convenient” direct deposit) our hard earned money into someone elses hands (our bank). Then, OUR money works 24/7, 365 days per year for our bank. If we’re lucky, they provide us “free” checking or other “perks”. In reality, our bank makes a LOT more money on our checking, savings and money market accounts than we do.
-Leveraging the bank’s money to purchase our homes. Since most of us can’t afford to pay cash for our homes, we must use someone elses money. Our current system enables us to finance up to 100% of the purchase price and have the seller pay all the closing costs. This means we can literally “purchase” our homes with no money out of our pocket. The lending industry promotes the “positive” aspects of this sytem - promoting home ownership, income tax advantages of mortgage interest, low fixed rate payments…. What they don’t promote is the major problems - Zero equity and how we have to pay the money back - using THEIR rules.
-Paying mortgages back based on the lender created amortization schedule. We have been taught to think that a 30 year fixed rate mortgage of, say 4% would be great financial move. If you don’t think so, just ask any one of your friends if they would like a 30 year fixed rate mortgage at 4%. What we don’t realize is that the reality of borrowing $200,000 at 4% for 30 years equals total payments (out of OUR pocket) of $343,739. Our monthly payments are $954.83. Of the first payment, $666.67 goes to your bank and only $288.16 benefits YOU. 69.8% of YOUR money benefitted the bank (what happened to your 4% interest rate???). Five years into your fabulous 4% mortgage, you have paid $57,289.80 out of YOUR pocket. You still owe the BANK $180,895. In five years, you have built less than $20,000 of equity while paying your BANK $38,184. $350.68 is now being credited toward principal, while $604.15 is profiting the bank. 63.3% of YOUR money is still benefitting your lender, after 5 years of payments at “4% interest”. FYI: The 4% you are being “charged” is 4% of your mortgage balance owed at the end of EACH month. At the end of five years, you are being “charged” 4% interest, yet 63.3% of your PAYMENT is still profiting the bank.
Ask yourself this one question: Why would you send $954.83 every month to your financial advisor, for 60 months (total investment of $57,289.80), if you knew from the start that you would only have $19,104.97 and they would have $38,184??
So….. What we have been taught to believe as “normal” is to have our hard earned money work every day for someone else, then borrow money back from these same people to purchase our homes, then pay them back based off of their rules, all the while bragging to our friends that “I have FEE FREE checking” and am such a good credit risk that I have a “4%” fixed rate mortgage.
Seriously, folks, what part of our current system of banking, borrowing and paying money back is designed to help us succeed financially?????
After spending over 17 years as a mortgage-lending professional, what I realized with United First Financial and the Money Merge Account program is that American families need to realize there is a much better “SYSTEM” for utilizing OUR money AND the bank’s money to OUR benefit. Once we learn to think and act like the BANK, we can obtain very positive financial results for OURSELVES!
Using existing banking tools and rules (an equity line of credit utilized as your primary checking/savings account) makes your money work for YOU 24/7, 365 days per year, to enable you to cancel interest and eventually help you develop wealth. The Money Merge Account software and coaching program acts as your “financial dashboard” or “GPS system” to navigate you from where you are now to completely mortgage (and debt) free in the shortest possible time, with the greatest possible savings.
Before you pass judgement on any new “system”, make sure to truly analyze your current “system”. You just might find you’ve been a life long willing (and losing!) participant in one of the biggest financial “misconceptions” in history.
Banking and lending institutions (even Credit Unions!) are businesses designed to make money for themselves. They utilize their rules and OUR money to create THEIR profits. Why shouldn’t we utilize THEIR rules to help US create a much more positive financial future?
Ultimately, whose future is more important? YOUR’S….or your bank’s?
Mike Smela
Founder, PhysicianLender and NFI Hunters Inc.
Vice-President, Carteret Mortgage
Branch Manager, United First Financial
http://www.u1stfinancial.net/FireYourMortgage
http://www.DebtFreeMichigan.org
December 24th, 2007 at 10:22 am
There is one thing that would be very helpful for me. I would like to see the mortgage amortization using MMA along with the corresponding HELOC disbursements and dates. I cannot find such an analysis anywhere. It will help me immensely to see the complete cash flow. For simplistically’s sake, please use the following assumptions:
House Value 196,000.00
1st Mortgage Bal: 120,000.00
Term 360 Months
Payment pr and int. 738.86
1st payment date 02/01/2008
monthly income 4,000.00
disposable inc. 825.00
Receive income monthly on 1st of each month.
all bills due 1st of month 3,175.00
Thank you
Bill Voorhees
December 31st, 2007 at 3:21 pm
You won’t find an amortization using the MMA and HELOC because if this were available, no one would need UFirst’s software. So, the only thing you can do is have an agent do an analysis for you and this will give you an abbreviated amortization (broken down by year instead of month).
You can, however, learn more about how HELOCs work in conjunction with the MMA program. You can find information here about HELOCs and creative yet effective methods to reduce the corresponding monthly payments:
http://thepayground.com/heloc_home.html
January 1st, 2008 at 6:59 pm
MMA does not work faster than doing it yourself, nor will you pay less interest. No matter what anybody says, they can’t change the math. Shuffling money in and out of a HELOC adds a layer of complexity and provides no more than 1/2 of 1 percent of your savings. Why? because “interest cancellation” only works on the equivalent of your take-home pay, not your entire outstanding balance.
The interest you pay for your mortgage is for the use of the money the previous month. There is nothing unfair about it.
Contrary to statements made, the smartest thing to do with your money is to invest it for the long-term, instead of paying off your mortgage. Sure, you might pay 1 and 1/2 times your mortgage amount in interest, but you can make over 2 times your mortgage amount in investment returns.
January 3rd, 2008 at 6:46 pm
Jimmy,
I’ve watched my stocks go up and down for years; but now I’m watching my mortgage go down–w/out fluctuation. With the MMA I’m not faced with timing issues as I am with my stocks (when to cash them out–buy low, sell high, yadda x 3).
I wonder what all the laid-off Mortgage bankers would choose, if they could choose, between having their mortgage paid off or dipping into their stocks? What if your stock portfolio is upside down when you need the money–or when you retire? The MMA is guaranteed–because, like you say, it’s just math.
Everyone’s portfolio needs a few safe investments–most opt for municipal bonds or CDs–but even those fluctuate with the market and may not be at their optimum when needed (most have interest penalties for early withdrawal).
Not with the MMA–your mortgage balance is always going down…and your HELOC continues to provide needed liquidity for emergencies. Sure would be a bummer if you had to pull from your ‘upside down’ portfolio, wouldn’t it?
Jimmy, do you guarantee that I’ll make money in the stock market? No, of course not; but I’m watching my mortgage balance go down, down, down–via the MMA.
Therefore, in my simple world one thing is guaranteed: I’ll own my home in less than 8 years–whatever happens in the market place. We need to compare notes at that point–the point where I’m mortgage free and can invest even more in the market.
All this hysteria over some new system–and without any experience with it. And the beef over $3500? If any of the naysayers out there could get an effective mortgage of 2.6% for $3500 they’d be all over it. And no one would complain. That’s what I have with the MMA. Cool the whining and look at the MMA as the intelligent ’sure thing’ in your portfolio.
The market is a gamble; MMA is not, especially when it’s used to balance out the portfolio. And that is why I now sell it: I watch it work first hand.
Regards,
Steve
http://www.yourhousepaidoff.com
January 3rd, 2008 at 8:21 pm
When I first researched the benifits of MMA, I was not looking at the debate of “pay down Mortgage” or “invest at better yields”. I was more interested in the benefit of paying the mortgage down with the aid of MMA for 3,500.00 or paying it down at the same speed for free. MMA is for the person who honestly wishes to pay his mortgage off as soon as possible but doesn’t really have a clear idea how to do it. The math shows the following: If a person can determine his discretionary income each month, and apply it to his 1st Mortgage, he will match or exceed MMA paydown without paying 3,500.00. Get a free heloc as a safty net in case you guess wrong about your discretionary income any given month. Be sure to then pay off any balance on the heloc with future discretionary income, then get back on schedule. MMA does nothing different except to give constant direction to individuals who need such a discipline. Certainly, if you compare such a person who uses MMA vs. such a person who squanders his discretionary income, the person using MMA will be better off in the long run. Conclusion: I will use the 3,500.00 to pay down my mortgage rather than for the purchase of software.
January 4th, 2008 at 5:56 am
Bill,
I don’t think you understand how the MMA works. First off, I agree that with some diligence anyone can create an excel sheet to figure how to do this. But, it is not simply utilizing discretionary income to pay off the mortgage as you assume.
What this program essentially does is let you act like a bank. You utilize a HELOC and keep the monthly interest rate on the HELOC between 2-3% per month and pay down your mortgage or credit cards, which are at a higher rate.
Since the HELOC’s interest is calculated on the average daily balance you can withdraw money to pay your mortgage, but still keep the daily balance low by depositing your pay and idle cash in the HELOC.
I was very skeptical at first, and I am still trying to create an excel document to verify the claims. However, the theory behind it is sound. We just need to break out of our trained thinking where we deposit into a checking account and pay a mortgage over 30 years.
January 4th, 2008 at 10:49 am
@Steve
I agree that if you want to use MMA or its ilk as your “compass” to give you that warm fuzzy feeling that you are doing the right thing, go right ahead. Keeping a HELOC on the side for emergencies is valuable, too. Going for a guaranteed return rather than a market return 10 years from now is also something I can’t argue with as long as you like to be debt-free and cash-poor. Paying $3500 is not worth it to me.
As for MMA being a new system, sorry, been there - done that. You are not getting a 2.6% mortgage. Your HELOC shuffle only offsets the interest equivalent to borrowing your monthly take-home, the rest of the mortgage is paid at full interest. This is not whining, Just math.
@Kirk
Please forget the bank analogy, it’s bogus. If you want to understand what MMA and its ilk does, create the following EXCEL scenarios:
1) A loan amortization table, adding a column that accounts for an extra monthly payment. Don’t forget to put a sum at the bottom showing your total interest paid. If you run your numbers through it, you will see that MMA does not compete with doing it yourself.
2) If you want to see how the HELOC shuffle works, create the amortization table above and create a second amortization table showing an interest-only payment for the HELOC. In the first amortization table, reduce your mortgage balance by your total take-home pay. Apply this amount to your HELOC table. Modify your HELOC interest calculation to include a factor that you set between 0 and 1. This factor models the interest rate reduction you get by depositing your pay into the HELOC and paying bills from the HELOC. Don’t forget to reduce your monthly discretionary income by the HELOC interest you pay.
If you want, I can get a spreadsheet to you.
January 4th, 2008 at 12:11 pm
The January 2008 issue of Broker Banker Magazine is dedicated to mortgage and banking professionals who use mortgage acceleration products to help their clients pay off the homes sooner. It covers the views on their skeptism when they first heard about these programs and what they think about it now. This issues also has dozens us testimonies from clients for MMA and CMG telling what they think of the programs now that they’re on them. Here is a link where you can view the entire issue for free online: http://www.brokerbanker.com/page40.aspx
Best regards,
Brian Topor
January 4th, 2008 at 6:43 pm
JimmyDaGeek,
I would appreciate the spreadsheets if you would be kind enough to send them. I am really trying to get my arms around the notion so you would save me a ton of work. I was planning to create an excel document to test the method.
You can send to my email kkinder94@yahoo.com.
Thanks,
January 6th, 2008 at 7:31 pm
Mark,
I do not suggest that MMA does not help a person pay his debt off faster. I do have a problem paying $3,500.00 for something that can be done just as easily for free and use their hard earned $3,500.00 to pay down their own debt.
I also object to Advertisement which misleads people to sell software. Please see the following 2 examples:
(1)
“With the Money Merge Account system you could have your home paid off in as little as 1/2 to 1/3 the time, with NO increase in your current monthly mortgage payment and with NO refinancing of your existing mortgage. You can even payoff other high interest debts, including credit cards and auto loans.”
This quote leads people to believe that they can reduce their mortgage debt without increasing their Payment when, in fact, they are paying, in addition to their monthly Payment, all of their discretionary monthly income toward their mortgage.
(2)
Mike, you say “You utilize a HELOC and keep the monthly interest rate on the HELOC between 2-3% per month and pay down your mortgage or credit cards, which are at a higher rate.”
Please note that mixing terms is not helpful in making people understand cash flow. No HELOC only charges an “annual” rate of 2-3%. HELOCS charge interest on a daily balance but the annual rate is between 7 and 11% on every cent borrowed.
If anyone who has used the MMA would share their actual heloc cash flow debits and credits along with their resultant mortgage reduction, I would gladly show a side by side comparison which would accomplish the same debt reduction without paying $3,500.00.
Thanks
Bill
January 7th, 2008 at 12:15 am
Bill,
The premise of
“This quote leads people to believe that they can reduce their mortgage debt without increasing their Payment when, in fact, they are paying, in addition to their monthly Payment, all of their discretionary monthly income toward their mortgage.”
is not quite accurate. What’s really happening is that the income (discretionary and non-discretionary) is being leveraged against the mortgage to cause a compression of the time/value of the money loaned on the mortgage. What UFirst is saying in the ad is that you can pay off early without the “extra” principle payments that nobody does because they know they will never get that money back if they need it. Also, I don’t think the advertisement you quoted is a UFirst approved ad. None that I have seen mention a car, etc. The portion of the 1/3 to 1/2 the time is accurate though.
Other than that, I think you have a great grasp on the concept. The challenge with spreadsheets is that it’s easy to calculate after the fact, but not easy to calculate prior to the fact.
With the concept of interest cancellation, which we teach at my company, the savings are dynamic, meaning that they fluctuate with the ebb and flow of money coming into and going out of the account. This makes it very difficult to track the effectiveness of the savings on a day to day basis.
By depositing money into a loan with an open ended interest structure, the “interest cancellation” effect varies. We have decided to sell the Money Merge Account software because those dynamics/fluctuations are calculated into the overall picture. The software then gives you a 3 month look (forecasting) of the cause and effect of your spending, which our clients are finding very motivating.
To illustrate how important the fluctuations are, here’s an example of the interest savings realized by somebody with $5000 in income getting paid twice a month (bi-weekly) vs. getting paid monthly.
If I have a $0 balance on my HELOC and I spend $5000 (say to pay down the principle balance on my mortgage) on the 1st day of the month, providing that I make an interest only payment on the 1st day of the next month, I would pay $41.67 in interest for the $5000.00 that I borrowed for the entire 30 days. However, if I deposit $2500 toward the line of credit (LOC) on the 15th and another $2500.00 on the 30th, my average daily balance (which is the interest calculation method used on these types of LOC’s) is reduced. Here’s the math @ 10% interest.
10% / 360 gives a daily factor of .000277777
(this is a normal banking calculation for daily interest)
Paid Monthly Example:
$5000.00 x .000277777 = daily interest charge of $1.388885
$1.388885 x 30 days = $41.67
Paid Semi-Monthly Example:
$5000.00 x .000277777 x 15 days = $20.83 (because the balance is re-adjusted by the bank on day 16 when I deposit my $2500.00 on day 15)
$2500.00 x .000277777 = a new daily charge of only .6944425
.6944425 x 15 days = $10.41
So, here’s the comparison:
$41.67 vs. $31.24
Based on the simple concept of depositing monthly or semi-monthly income into the HELOC. That’s an interest cancellation savings of $10.43 or roughly 25%. That means my 10% loan wasn’t a 10% loan, it was effectively a 7.5% loan. If a person is paid bi-weekly instead of semi-monthly, there are some small but additional savings. A key component here is what did I have to change to realize those savings. Nothing, other than where I deposit my money and where I spend it from.
The question now is, was $5000 the optimum amount to send to my first mortgage? (pay the least in interest on the LOC and get the maximum benefit against the 1st position mortgage). The answer is… who knows. Everybody’s situation is different.
What’s missing from my calculation is this. Life. My calculation doesn’t account for how much a person might deposit vs. how much one might spend each month, using the LOC as the primary checking account.
What we LOVE about the Money Merge Account program is that those calculations are all done real time in a completely dynamic format. If I deposit $1.00 less than what I had previously told the software I was going to and I spend $200 more than I had budgeted, the software immediately shows me the cause and effect. We have actually had clients change purchasing decisions because of the effect a particular purchase was going to have on their debt free date.
Our clients love the software and we get an average of 3.2 referrals per client since we really started selling it in December. (we signed up as agents in July but did 3 months of research to verify the product claims.)
Anyway, some good information in this thread, other than the bashfest back in October. The reality is that no financial product is right for everybody. However, the Money Merge Account program is worth consideration if you have not had success in paying off your mortgage and you want to.
By the way, don’t people pay for information all the time. Is this really any different. Not only do our clients get the software, they are completely trained on how to use it, as well as how to maximize the capabilities of it. And, if they ever have a question, product support with a real live person here in America is just a phone call away. So is it worth $3500.00. For some yes, for others no, but it’s certainly not a scam and I contend that for the tens of millions trying to pay off a mortgage, it’s certainly worth consideration.
PS.. Bill, if you want, time allowing, I would be happy to do a one to one webinar and show you the dynamic factors of the real Money Merge Account software (not the static analysis software) so that you can see what I’m talking about. It really is amazing. I wish I was smart enough to figure it out before UFirst.
Travis Mitchell
Debt Free Project
http://www.debtfreeproject.com
January 7th, 2008 at 6:46 pm
Hi Travis
To illustrate a point, allow me to posit 2 scenarios.
1.) Get a case study (or make one up) using a scenario where a 30 year mortgage has (or would be) paid off in a much shorter time using the MMA software and a HELOC with a minimum of 3,500. begining balance for the software.
2.) Using the exact same income and expense scenario, having the income received with the same timing as scenario 1, and paying the same monthly expenses whenever they are due during the month, and applying any extra income at the end of the month to the mortgage balance, This scenario will always pay off faster than MMA and it will cost nothing.
Neither Scenario 1 nor Scenario 2 will work if a person chooses not to adhere to the appropriate discipline.
Thanks,
Bill V
January 8th, 2008 at 2:01 pm
@Travis
I would like to second what Bill just wrote.
The HELOC shuffle works by adjusting the balance so that you are creating an interest-only loan equivalent to the monthly take-home pay. It looks a lot more impressive in your software because peoples’ financial lives aren’t as simple as a spreadsheet.
As Bill pointed out above, you can approximate the effect by simply clearing out your checking account after all your bills are paid.
No one disputes that MMA and its ilk can help people see their savings and change their spending habits. BUT, it’s the discretionary income that provides over 99% of the savings, not the HELOC shuffle.
January 14th, 2008 at 8:51 pm
All I want to know is can I use the software will popping fenfen and working out on my 30 days to rock hard ab’s machine.
All joking aside, I believe the product is helping some homeowners. But this is not the right answer for must people. This product is gaining more press due to homeowner’s mortgage payments being at an all time high. I am all for paying done debt. We as americans have taking debt to an all time high. We need to question the products being sold. $3,500 for a product that promotes something that you can do on your on is not wise. Its funny how this product is being marketed on the savings you will gain, and yet the $3,500 it costs is a fair price. Gee, I wonder if they accept master card or Visa.
January 18th, 2008 at 7:28 pm
@Bill,
We’ll have to agree to disagree. There are lots of math examples at the Ufirst forum that show otherwise. I’m not going to replicate them all here. People can go to http://www.UfirstForum.com to find them.
I do agree with you however that discipline is necessary with both ways. I believe, based on the history of our clients, the Money Merge Account program helps motivate people.
@Jim
There is no doubt that the discretionary income is the most important factor. Anybody who disputes that is mis-informed. However, the leverage that the “HELOC shuffle” provides is also a worthy component because it’s about leveraging the maximum amount possible, which includes the discretionary income.
@JoMaMa
What is the true cost of something that achieves the stated goals? It reminds me of how FAT I am. I have a weight bench and treadmill sitting in my garage. On top of that, I’ve paid $45.00/mo for the past 2 years for a gym membership. I was too cheap to hire the personal trainer that they recommended to help keep me motivated and on track. So, today, here I sit, with $1080 less than I had, 20lbs heavier than when I started and I can’t park my car in my garage. (reminds me of about 70% of my friends and their financial situations)
Because I love the concept of this, I’ll give you another weight analogy. What if I had an amazing new fork. On the end of that fork was a digital readout. Now, what if that readout told me for every bite of food I took; how good/bad it was for me, how many hours I’d have to exercise to burn it off, what it did to my cholesterol, etc. Is it possible that I may take more responsibility for what I ate? Is it also possible I might be more healthy because of it?
My point is that this product is certainly a behavioral product in addition to a math engine. Nobody at UFirst has ever said that you can’t pay off your mortgage early using the plethora of other methods out there. What UFirst is saying is that if you want to pay off your mortgage, and you haven’t found a way that works for you, they have a way that they will guarantee will work, if you’ll follow the plan. Nothing more, nothing less. The product does work as advertised.
By the way, no, UFirst does not take Visa, MC, AMEX, Diners Club or any other credit card.
PS.. We just put a post up at HubPages that does a good job (I think) of introducing the Money Merge Account product with some good links to pro’s and con’s. If your interested in learning more. Address is http://hubpages.com/hub/money_merge_account_intro
Travis Mitchell
Debt Free Project
http://www.DebtFreeProject.com
January 19th, 2008 at 11:33 am
Jimmy seems to be the poster here making the most sense. Post 64 & 75 are about as good as it gets. In fact, as rates were bottoming and I saw my short term ‘emergency’ money yield approach 1%, I took those funds, refinanced from 6.75% to 5.65%, pulled in the term from 30 years (about 27 to go, at that time) to 20 years, and the payment still dropped a few hundred dollars per month. Two years later, another fee-free refi, and the new mortgage is 15 years 5.24%. So another 3 years cut off. I did set up the HELOC as a source of emergency funds, but in the time I’ve had it, only tapped it a couple times and paid it back within the next month.
In the website from Jubilee, I saw no example of the math at work. Only an anecdote of a Cindy who paid her mortgage in 5 years instead of 28. My TI-35 says that would take about 3 times the monthly payment. I understand the MMA intent is to turn idle money into a savings of say 7-8% (the HELOC rate). Even if one has $10,000 in cash sloshing around, this is a ‘found’ $1000 or less per year, not the $1000 or more per month Cindy would need to reduce her mortgage by 23 years. (I assumes $200K balance, 6% fixed. So 28 years is $1230/mo, but 5 years jumps to $3866/mo. Where in the world did that money come from?)
I would welcome a real example, with real numbers.
JOE
January 25th, 2008 at 11:40 pm
As an certified financial analyst and investor myself, I don’t have a bias towards any side in regard to these product. Does it work? Yes. Is it for everyone? No.
To be honest, this product can really only be catered to very minimal % of people in our country anyways. Why? Because A) most Americans carry more short term debt than they make on their annual incomes, B) it’s a proven fact that most Americans spend more money than they do earn by a whopping -4.5%, C) most Americans own homes that are not only heavily leveraged but are way above what their true financial capacity allows them to realistically own. All of these mean that the majority of Americans don’t have the disposable income to double/triple their payments like this MMA programs wants us to set up to pay down mortgages by 1/2 the time or the extra cash to do it. I mean seriously, for most Americans, it’s already hard enough to make that $1500/mo. payment on their existing current mortgage at 5.5% primary 30-year. Why do you think the market is tumbling and the housing market and mortage companies are shutting down as we speak? The fact is, most people are living way above their means, and to tell someone that all they have to do is dump all of their earnings into their HELOC and let the HELOC pay for everything sounds good and groovey, but one major caveat that isn’t revealed is that you actually have to dump a LARGE portion of your remaining income to pay off your primary mortgage, usually double or triple payment. That’s a daunting number to ask most Americans to do.
The other thing I really don’t understand about this product is that so many people think this is such a great investment opportunity. Can you actually categorize this as an investment? Yes, this society is already cash poor, house rich, and this program only reflects that concept even more. What’s going to happen when one retires and doesn’t have income anymore, yet their home is paid for? Draw from the HELOC to retire or do a reverse mortgage? If I draw from HELOC, I pay a much higher interest in which I can’t repay because I have no more income to do so unless I want to use my SS funds for that. Bad idea. What about reverse mortgage? Well, then that’d mean I’d have to give up my home and trade my current home value (not factoring in future inflation and property growth rates) into an annuity with a company. Another bad idea.
What people don’t realize, or maybe they do, but my concept is much different than those that like these programs, is that this is nothing but the concept of throwing all of your money into one basket, your home. Plus these programs could only realistically be catered to the higher net worth individuals. If my mortgage is $1500/mo. and you’re asking me to dump another $1500/mo. to reduce my interest by 15 years, I’d much rather do it the conventional way, borrow at 30-years at an all-time low 4.5% interest rate. What’s even better is that I can use that interest to deduct from my taxes each year. Say I was in the 35% tax bracket and 7% state level, that’s 42% of the 4.5% mortgage rate that the Fed will return back to me. So my net interest rate is only 2.61%! And yes, conventional mortgages interest calculation are not compounded. Based on that fact, I could invest the extra $1500/mo that I was supposed to use to pay down my mortgage and put it into something like an iBond that will pay me 4.5% compounded interest. That’s arbitrage at it’s best, and that’s exactly how banks make their money.
Or even better, why not take that $1500/mo. that you were supposed to pay with this system, save it for a year in your own checking account, and go buy yourself another property for investment in a highly appreciating area. Everything has it’s ups and downs, but you really can’t go wrong with real estate investments, especially when the opportunity presents itself at all-time lows and buyer opportunities. You can literally use your $18,000 to buy a $150k-$180k house at say a 6.75% interest investment rate. Put a decent renter in there, use a PM company to handle your issues, you can still come out with a + CF. But the kicker is that you are buying the property at an already 20-40% discount from 6 months ago. Wait about 2 years when the market gets better, you are basically guaranteed to double your original $18k investment! Don’t forget that your renters are covering your mortgage payments for you…that’s not where the money is made. What did you do? You just basically earned 40% compounded in 2 years! Can you beat that with this program?
My point is this. This program is for those who’s goal is to pay off their homes as their primary goal and not have to deal with paying it off later. For those looking for better investment opportunities or needing liquidity for emergency purposes, I don’t think it’s appropriate. It really depends on what you are looking for.
I mean heck, if I turn my $18k each year that I’m supposed to throw into paying my mortgage off 15 years sooner, I can do the same thing by investing that into more real estate, wait for the market to correct, sell them all off again, and end up not only paying off my primary home mortgage all at once in the same amount of time, but also end up having a pretty good nest egg for my future retirement with a couple of investment properties (again, can use all these loan interest to deduct my taxes), getting more back on my tax returns by taking a full interest deduction from my primary 30-year, maximizing my additional income to earn me a greater return in the near future than to just save a measley 4.5% (2.61% net if in high tax bracket), and thus, I just created and maximized arbitrage just like banks do when they bring accounts in and pay you a 5% on a CD when they use that money and loan it to someone for 8-10% for a vehicle, personal, or investment loan. What’s the difference? Why not do the same that banks are doing. At least we all know they are banking $billions by people like us who deposit our monies there.
What’s even more surprising to you, and I’m sure many of you never even considered is that there is a HUGE risk you are undertaking by paying off your mortgage too. Have any of you considered what happens if your home burns down to the groud, or if a natural disaster occurred, etc? Do you honestly think the insurance company will pay all your equity that you’ve built up in your home by paying off the mortgage and even give you the allowance to rebuild your house? Think about that. If that were to happen, you just lost every single penny you’ve spent so hard in trying to put double/triple your hard earned money in just your one house. And here’s another finance principal that many have overlooked. If a home were to appreciate 5% per year and your current home was valued at $300,000 hypothetically speaking, you’d have a $15,000 gain. Say you decided to put down 20% and get a 80% LTV loan at 4.5% current rate interest for 30 years. Your $60,000 investment + $15,000/year interest or $75,000 total investment by end of year 1 would yield you a net 20% return! If you did the mortgage accelerator by putting double with your intial $60,000 down payment, your total investment by year end would be $90,000 for a net 16.6% return. Keep in mind that if every year was that way for the next year or so, you’d net a 100% return on your investment of $15,000 in interest vs. 50% return by doubling your payment to $30,000 each year to accelerate your payoff. I am assuming this to be effective for 10 years because that’s how long it’s going to take minimum to pay off the loan at this amount. Then consider the fact that the average American holds their home for less than 4 years and it’s only going to be lower as we have the 2 out of 5 year rule of tax free investment on primary residence.
The fact is, by NOT utilizing this program, you CAN come our WAY ahead of the game. So what if you have to pay double/triple interest payments by doing it systematically for 30-years. The fact is, most Americans won’t even consider living in the home that long anyways. I can take that extra money I have to put in and purchase more real estate, have someone else pay my mortgage, and in 15 or less years, the properties I’ve acquire would be sold off for double/triple the amount I originally paid (if using 5-7% conservative annual returns), plus I’ve never had to pay the interest on it, yet was able to take deductions to offset my income to give me more money in return on my taxes. At that time, I’d have more than enough money to pay off my mortgage, plus some as a solid retirement nest egg to continue to build my empire.
Be smart people…think about it. Someone mentioned the opportunity cost that it’d be dumb NOT to use this program because you can save the 15+ years of interest and substantial savings. If you’re looking at a $300k home, we’re talking about $175k in interest. Seriously, in 15 years, your lost opportunity cost because you decided to dump $18,000 more per year for 15 years is going to cost you a heck of a whole lot more than if you just paid the conventional 30-year loan and took the difference to invest into something that will actually make money for you. Yes, you are taking on more debt, but it’s good debt to have and will pay huge dividends in the future.
Hopefully, you all agree. But like I said before, my philosophy will not be accepted by everyone.
January 26th, 2008 at 10:02 am
KUDOS Kenneth! Your a gentleman and a scholar… that’s great information and wisdom for folks who are willing to listen and understand!
Hopefully, it will help aide folks cut though all the misleading and deceptive prepayment scheme bull being pedaled out there… and help stop them from wasting their hard earned money.
…
As stated above, folks can pre-pay their mortgage on their own, save more money, and get better results. Folks don’t need any software, just paper and pen to write out a simple budget.
As for psychological benefits, if any… there are plenty of low-cost alternative budgeting and personal financial mgmt software such as Intuit Quicken and Microsoft Money both of which sell for only $40, are more sophisticated, and backed by large reputable companies.
A HELOC is not necessary in order to take advantage of any potential interest rate arbitrage, which when properly analyzed is de minimis. Likely the HELOC balance transferring voodoo will end up costing folks more in total interest and finance charges not less.
If folks are looking to generate more interest income (discretionary income) from their cash accounts then there are plenty of ‘risk free’ FDIC insured alternatives to the HELOC balance transferring arbitrage scheme. http://www.google.com/search?q=online+savings+account
Don’t be fooled, financially these merge accounts in the USA are inferior to the many free and low cost alternatives, and they don’t replace the need for individual financial responsibility and self discipline!
Find out all the facts, understand your alternatives, and understand the financial decisions you are making. Taking financial advice from unqualified ‘software’ salesman is simply a recipe for disaster.
The interest savings come only from pre-paying principal with income that you earn… it’s not rocket science; it’s just simple common sense! Don’t waste your money and don’t be misled!
http://www.integramortgages.com/financialvoodoo
January 26th, 2008 at 10:16 am
The concept is actually simple
1) Net Monthly Income
2) Minus monthly Expense
3) Equals Discretionary Income
Apply Discretionary income to Debt or Invest it.
If you can invest it at a rate higher than your Debt rate, Do so. Otherwise Pay down Debt.
Oh, by the way, Take the 3,500.00 charge for MMA software and use it to pay down debt or invest it. (Hope I Saved you $3,500. for free)
Thanks,
Bill V.
January 26th, 2008 at 11:50 am
@ Kenneth,
Kenneth, I agree whole heartedly with your position that this program is not for everybody.
However, based on the examples that you provided above, it is clear that you have not seen the software and have a limited understanding of how it works.
If a person could use it to NOT pay the bank all of that interest by maximizing the leverage of every dollar, which most people currently don’t do, and invest, they would be way ahead, correct?
I’ve put examples on another board, http://www.ufirstforums.com, so I’ll not repost them here, but a client with discretionary income could both invest and pay their mortgage off early, and be way ahead, including the cost of the software. Regarding the tax advantage, that doesn’t go away until the home is paid off, so the client continues receiving that benefit.
Kenneth, although you articulate your points very well, the fact is that the software doesn’t work in the manner in which you described it, so to be fair, you should probably find an agent and take a good look at it. Some of the top agents are financial planners who are using it so that their clients can have their cake and eat it too, so to speak. If you’re interested, let me know where you are and I’ll see if I can come up with a name or two who will speak your language.
By the way, where can I get that 80% LTV for 4.5%? We have some clients who may be able to really benefit from that.
@Ron, you said:
“Don’t be fooled, financially these merge accounts in the USA are inferior to the many free and low cost alternatives,”
We extensively researched the all of the alternatives that we could find prior to endorsing this product. Can you tell me how this product would be inferior to the other lower cost and free ones you mentioned , or was that just a generic statement with no factual basis. I don’t mean that in a sarcastic way either. We are very interested in making sure we are representing the best products that meet the stated objectives for our company. I’d love to know which products you’ve found that have the same financial fundamentals built into them.
Travis Mitchell
http://www.debtfreeproject.com
January 26th, 2008 at 6:56 pm
Travis,
You said “…it is clear that you have not seen the software and have a limited understanding of how it works.”
You also said “…I’d love to know which products you’ve found that have the same financial fundamentals built into them.”
Please show an actual case example from it’s commencement for any period of time and I will be happy to return a side by side example of #95 above and show that #95 above will show better results during any point in your example and will cost the person nothing to obtain those better results.
This invitation is for anyone else who is currently using the system and would wish to submit their actual cash flow anonymously. This is just an honest request so that a real comparison can be demonstrated.
Thanks,
Bill V.
January 27th, 2008 at 3:01 pm
Bill - good luck with that request. Those advocating this system do everything to avoid discussion of hard numbers. I’ve spent quite a bit of time recently trying to find such an example as you requested. The closest I’ve seen is a video from the original company selling the system, and it’s clear that on a $5000/mo net income, that an extra $1000 is funneled to the mortgage. First, who has an ‘extra’ 20% after retirement savings, mortgage, expenses? And who needs the software to tell you to do that? Anything that can’t be explained after the thousands of posts I’ve seen leaves me wondering.
JOE
January 28th, 2008 at 4:20 pm
I’m in the middle of writing a report on 10-12 ways to pay off your mortgage early–the first six as so simple and painless you may wonder why you haven’t done them before. Not sure about the second half of the report yet, and whether it will include six more strategies or fewer. If you want to be notified when it’s available, drop your name in on my website http://www.thegreatmortgagerevolt.com
What if you have no extra money, with regard to the MMA structure. Two points about this:
1) if you spend absolutely every penny you make every month, you can still save money by using your equity to pay off your mortgage faster. If you spend one penny more than you make, you won’t save. You must live within your means.
2) if you have extra money sitting around in a savings account at 5% or less, by all mean pour it onto your mortgage principal. If you don’t, like me, but you’d still like to save $50,000-$100,000 on your mortgage, using a HELOC is a SMART way to do it.
I’m not an advocate of using the MMA. It isn’t a scam, but it’s pricey. You don’t need an aeronautical engineer’s software program. You need a one-page list of instructions.
If you want to know where to get that kind of info, call me. Tollfree in the US.
1-888-664-6651
January 28th, 2008 at 8:03 pm
Lin Ennis
There is 1 way to pay your mortgage off early. Pay more money.
You said “if you have extra money sitting around in a savings account at 5% or less, by all mean pour it onto your mortgage principal. If you don’t, like me, but you’d still like to save $50,000-$100,000 on your mortgage, using a HELOC is a SMART way to do it.
If you have No Extra money, and are able to save $50,000-$100,000 on your mortgage, I would prefer a spreadsheet to a toll free phone number.
Bill