{"id":1356,"date":"2007-10-01T05:00:28","date_gmt":"2007-10-01T12:00:28","guid":{"rendered":"http:\/\/getrichslowly.org\/blog\/2007\/10\/01\/is-a-money-merge-account-a-good-way-to-pay-off-your-mortgage\/"},"modified":"2019-09-26T22:07:09","modified_gmt":"2019-09-27T05:07:09","slug":"is-a-money-merge-account-a-good-way-to-pay-off-your-mortgage","status":"publish","type":"post","link":"https:\/\/www.getrichslowly.org\/is-a-money-merge-account-a-good-way-to-pay-off-your-mortgage\/","title":{"rendered":"Is a money merge account a good way to pay off your mortgage?"},"content":{"rendered":"<p><img decoding=\"async\" loading=\"lazy\" style=\"border: 0px;\" title=\"A money mortgage can accelerate your mortgage payoff, but is it worth it?\" src=\"https:\/\/www.getrichslowly.org\/wp-content\/uploads\/moneyhouses.jpg\" alt=\"\" width=\"250\" height=\"188\" align=\"right\" hspace=\"5\" vspace=\"3\"\/>Over the past few weeks, I&#8217;ve received several questions about money merge accounts (sometimes called &#8220;Australian mortgages&#8221;). I haven&#8217;t paid much attention to these because I&#8217;m unfamiliar the products. But when Abbie wrote last week, I decided to do some research. Here&#8217;s what she said:<\/p>\n<blockquote><p>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 &#8220;sophisticated algorithms&#8221; to compute how to best pay down a <a href=\"https:\/\/www.getrichslowly.org\/spend\/home\/\">mortgage<\/a> 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.)<\/p>\n<p>I&#8217;m new to the whole homeowner thing, and know there are <a href=\"https:\/\/www.getrichslowly.org\/pay-off-mortgage\/\">differing opinions<\/a> regarding paying off a mortgage early, but was wondering if you&#8217;re familiar with this system. I&#8217;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&#8217;s own claims, but nothing from a reliable third party.<\/p><\/blockquote>\n<p>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&#8217;s how they work:<\/p>\n<ul>\n<li>The homeowner sets up a home-equity line of credit (HELOC), borrowing against the value of his property.<\/li>\n<li>Some large sum is withdrawn from the HELOC and used to pay down the primary mortgage.<\/li>\n<li>The homeowner does not deposit his paychecks, etc. into a traditional savings account, but applies them to pay down the HELOC.<\/li>\n<li>From time-to-time, another large chunk of money is taken out of the HELOC and applied to the primary mortgage.<\/li>\n<li>In case of emergency, the homeowner takes more money out of the HELOC.<\/li>\n<li>Though the HELOC will likely have a higher interest rate than the primary mortgage, it&#8217;s actually cheaper to maintain because of the way the interest is calculated.<\/li>\n<\/ul>\n<p>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&#8217;re not followed, it defeats the purpose of the program.<\/p>\n<p>The consensus on the web seems to be: yes, these programs can help you pay down your mortgage quickly; however, they don&#8217;t do anything that you could not do yourself for free. The expense <i>might<\/i> be worthwhile <i>if<\/i>:<\/p>\n<ul>\n<li>You want to pay off your mortgage.<\/li>\n<li>You don&#8217;t believe you&#8217;ll have the discipline to pay down your mortgage on your own.<\/li>\n<li>You do not intend to move \u2014 you believe you&#8217;ll be in your current house for many years.<\/li>\n<\/ul>\n<p>But most people with the financial resources to accelerate mortgage payments are able to do so without the assistance of a third party. <b>The easiest (and most flexible) mortgage acceleration program is the one you control yourself<\/b>: 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&#8217;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.<\/p>\n<p>You can read other discussions of money merge accounts at these sites:<\/p>\n<ul>\n<li>It&#8217;s important to note that the Australian Securities and Investments Commission <a href=\"http:\/\/www.thephoenixagents.com\/blog\/index.php\/mortgage-accelerator-under-fire-australian-securities-and-investments-commission-taking-action-against-mortgage-brokers\" target=\"_blank\" rel=\"noopener\">doesn&#8217;t like money merge accounts<\/a>. &#8220;Consumer organisations &#8230; concluded years ago that there were no savings to be made, and that promoters were engaged in unlawful conduct.&#8221;<\/li>\n<li>Fat Wallet Forums: United First Financial \u2014 Looking for the truth contains <i>52 pages<\/i> of discussion on this subject.<\/li>\n<li>Fat Wallet Forums: Mortgage accelerator\/offset accounts facts and myths<\/li>\n<li>Real Estate Blog: <a href=\"https:\/\/activerain.com\/blogsview\/120761\/money-merge-accounts---good-fairy-or-demon-\" target=\"_blank\" rel=\"noopener\">Money merge accounts: Good fairy or demon?<\/a><\/li>\n<li>The Simple Dollar: <a href=\"https:\/\/www.thesimpledollar.com\/money-merge-accounts-are-they-a-good-deal-for-home-borrowers\/\" target=\"_blank\" rel=\"noopener\">Money merge accounts: Are they a good deal for home borrowers?<\/a> (742 comments and growing!)<\/li>\n<li>Asset Builder: Accelerated home ownership thru line of credit<\/li>\n<\/ul>\n<p><b>Before you begin a mortgage repayment program of any kind, be certain that you understand the consequences.<\/b> Accelerating your mortgage payments may provide psychological comfort, but there may be <a href=\"https:\/\/www.getrichslowly.org\/pay-off-mortgage\/\">smarter financial choices<\/a>. Last year the Federal Reserve Bank of Chicago released a study [PDF] that found:<\/p>\n<blockquote><p>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.<\/p><\/blockquote>\n<p>All of this discussion about money merge accounts is just theory. I&#8217;d love to hear from somebody who has first-hand experience with them. Do you love the idea? Hate it? Do you think it&#8217;s worth the cost? Let us know!<\/p>\n<p><i><b>Note:<\/b> Just as I was finishing this post, I recieved <u>another<\/u> e-mail about money merge accounts. They seem to have reached some sort of critical mass.<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p><img decoding=\"async\" loading=\"lazy\" style=\"border: 0px;\" title=\"A money mortgage can accelerate your mortgage payoff, but is it worth it?\" src=\"https:\/\/www.getrichslowly.org\/wp-content\/uploads\/moneyhouses.jpg\" alt=\"\" width=\"250\" height=\"188\" align=\"right\" hspace=\"5\" vspace=\"3\"\/>Over the past few weeks, I&#8217;ve received several questions about money merge accounts (sometimes called &#8220;Australian mortgages&#8221;). I haven&#8217;t paid much attention to these because I&#8217;m unfamiliar the products. But when Abbie wrote last week, I decided to do some research. Here&#8217;s what she said:<\/p>\n<blockquote>\n<p>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 &#8220;sophisticated algorithms&#8221; to compute how to best pay down a <a href=\"https:\/\/www.getrichslowly.org\/spend\/home\/\">mortgage<\/a> 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.)<\/p>\n<p>I&#8217;m new to the whole homeowner thing, and know there are <a href=\"https:\/\/www.getrichslowly.org\/pay-off-mortgage\/\">differing opinions<\/a> regarding paying off a mortgage early, but was wondering if you&#8217;re familiar with this system. I&#8217;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&#8217;s own claims, but nothing from a reliable third party.<\/p>\n","protected":false},"author":3287,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[484],"acf":[],"_links":{"self":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/posts\/1356"}],"collection":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/users\/3287"}],"replies":[{"embeddable":true,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/comments?post=1356"}],"version-history":[{"count":0,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/posts\/1356\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/media?parent=1356"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/categories?post=1356"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}