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i am reading about these new money merge accts that are supposed to take off yrs of your mortgage payments and save you tens of thousands of dollars by reducing your debt and the interest on your mortgage.
i have an mba and it is too complex for my mind...anyone heard of this and does it work? anyone?
It's not really that complicated if you skip the math part and just use the paid for portion of your house to pay off the unpaid for portion.
The main problem with UFirst and the MMA is that it costs $3500. Anyone who can keep a checkbook can do something similar, with similar results for a whole lot less.
The second thing they do that burns me is make the whole ding-dang-diddly thing sound so complicated. Maybe they have to do that to get you to part with your hard-earned $3500--which, by the way, could provide a savings of $20,000 if applied to your mortgage instead of to them.
I suggest trying one of the competitive products for under $100. If you can't read and follow a few pages in an illustrated guidebook, then maybe you ought to hire these guys.
My mortgage broker husband (an expert in math, amortization and investments) looked into these money merge type accounts and came to the same conclusion. If you have extra money, put it toward the mortgage and DO NOT incur additional debt in the process.
Hi Karen,
You're right about putting extra money on the mortgage, of course. And I certainly wouldn't advise "financing" the $3500 the money merge account costs. It doesn't take a rocket scientist (or an aeronautical engineer from General Electric, United First Financial Money Merge Account | The Great Mortgage Revolt) to put extra money on your mortgage.
Something I learned about this quite recently is--and I'm still not endorsing the UFirst system--is that you aren't borrowing money to use your HELOC to pay off your mortgage years sooner. What you're doing is changing one kind of debt for a different kind of debt. This made so much sense to me, because I've done it. I just couldn't explain it that well!
Mortgage debt is expensive because it's amortized over such a long period of time, meaning the interest compounds over and over and the same outstanding balance.
On the other hand HELOC debt is relatively cheap, because you're dealing with a small overall balance (unless you go the MMA route) and you can reduce that daily balance by cycling your money through the account. Even if your cash sits in the account only a few days, it lowers what you owe.
Does this make sense?
Last edited by johnycakes; 01-11-2008 at 12:34 PM..
Reason: deleted personal contact info.
In the January 2008 issue of Broker Banker Magazine, you can read the opinions of several top brokers using the Money Merge Account and CMG's HOA product. You can also read testimonials from dozens of clients who are on these programs. You can read it for free at: Volume 114, January 2008 issue: http://www.BrokerBanker.com (http://www.brokerbanker.com/page40.aspx - broken link).
Looks like another misleading sales pitch from someone looking to make a buck. I'd like to see some numbers related to this claim - "But, if you were to offset that higher interest rate by keeping the average daily balance low by depositing paychecks and other deposits into that account, then you are borrowing from a lower interest rate to pay down a higher interest rate." Specifically, I'd like to see how lowering the balance on a HELOC reduces the interest rate to below that of a mortgage. I don't know of any HELOCs where the rate changes with the balance.
Maybe he'd be able to answer my question of how much, specifically, floating money on the HELOC saves over the life of the loan compared to the $3500 extra debt you're going in to in order to buy the software. Seems like none of the other salesguys want to talk about that.
I really get a kick out of how easy you guys make it sound to pay your home off earlier. If it were as easy as you say it is then why isn't home ownership at a record high? Why are home forclosure's at a record high instead?
I have a feeling this thread is going to go the same way that "prepaid legal" one did in the Business & finance thread.
Folks who have never posted to CD before are going to post "what a wonderful program it is"
Thank goodness out wonderful mods edit out the "contact me for more info" lines that somehow find their way in some of those posts.
The scariest part is how they recommend securing unsecured debt against your house.
So if you run into a serious problem what was once something you could of handled through a BK is now tied up in your house.
Of course they are going to claim it is a good program because how much of the $3500 fee do they receive for getting folks to sign up ?
If the same person had put $140 a month extra toward his mortgage instead of paying it in interest he'd wind up saving even more than $44,000 in interest and he'd cut more time from his mortgage. That doesn't include the long term advantage of putting the $3500 for the software toward his equity.
Assuming that he started this four years into a 30 year mortgage:
For a $120,000 mortgage, he'd wind up saving $40,950 and he'd be paid off 8 years (96 months) early.
For a $200,000 mortgage, he'd save $48,167 and he'd be paid off 5 1/2 years early.
For a $250,000 mortgage, he'd save $50,891 and he'd be paid off 56 months early.
He's stupid to pay $3500 for a software program that tells you it's better to pay $140 a month in interest that you'll never get back instead of paying $140 a month directly toward your mortgage as an extra payment.
You are not fully understanding what the writer is saying. He is not spending $140 per month on his heloc, he spent a TOTAL of $140 for 5 MONTHS on his heloc (average of $28 per MONTH). Through the use of the MMA he was prompted to do a "funds transfer" from the heloc to the first mortgage. That payment to the mortgage company CANCELED over $44,000 of first mortgage interest and it took 29 months off of his first mortgage.
He will be prompted to do these "funds transfers" multiple times through out the year.
At the end of the first year he may discover that he spent a TOTAL of $300 in interest charges to the Heloc in order to cancel over $50,000 of mortgage interest. Where else can you get a ROI like that?
At the rate he is going his home will probably be paid for in 8 or 9 years!!!
That is a whole lot sooner than your solution of just sending the extra $140 per month to the first mortgage.
The writer actually said it best, "Spending $3,500 to save over $44,000 in five months is, in my opinion, a great ROI! Another way to look at it, I was happy to pay interest of $139.14 on my ALOC to save $44,846 on my first mortgage."
What? Don't have anything to say about the numbers that I presented? Just name calling?
Is spending $400 on a heloc to cancel over $50,000 of mortgage interest a good ROI or not?
When I saw that I could spend $3,500 and get a money back guarantee that says that I will own my home in 8.9 years, pay ONLY $42,000 in interest (that includes my mortgage and heloc interest), SAVE over $103,000 in mortgage interest and cut over 2 decades off my mortgage, how do you say, "NO" to that. Who in their right mind is going to say, "No thanks, I want to give all my money to the bank/mortgage company". Now that is stupid!
The writer actually said it best, "Spending $3,500 to save over $44,000 in five months is, in my opinion, a great ROI! Another way to look at it, I was happy to pay interest of $139.14 on my ALOC to save $44,846 on my first mortgage."
That doesn't sound stupid to me.
You continue to avoid the point that many people have brought up with your math. You are not accounting for the money that's actually being paid to the mortgage to pay it down. You've got a handle on all of the stuff you're not going to get any benefit for (the $3500 software that goes to the sales guy and $30 a month in HELOC interest that the bank takes) but you're totally ignoring the money that actually does the work - you know, the money which you have to pay out of pocket to the principle of the mortgage.
How much per month extra is he paying towards principle on his mortgage in this example? Does he even say? It's typical for the marketeers of this scam to ignore that you have to actually pay down the mortgage with real cash to reduce the balance, so I'm guessing you don't know. It would explain why you continue to ignore real questions in this thread and just post marketing goop every few weeks or so.
Quote:
Why are home forclosure's at a record high instead?
Probably because people are living beyond their means. This program does nothing to help that - you've admitted this yourself. It doesn't help them when salespeople scam unsuspecting homeowners into taking out thousands of extra dollars to buy programs like these, either.
Quote:
When I saw that I could spend $3,500 and get a money back guarantee that says that I will own my home in 8.9 years, pay ONLY $42,000 in interest (that includes my mortgage and heloc interest), SAVE over $103,000 in mortgage interest and cut over 2 decades off my mortgage, how do you say, "NO" to that. Who in their right mind is going to say, "No thanks, I want to give all my money to the bank/mortgage company". Now that is stupid!
Here you're adding even more confusion by counting mortgage interest that you'd have to pay whether you pay off the mortgage or not. Why is it so difficult for anyone promoting this scam to answer simple questions? Why are they always throwing in irrelevant details to try to confuse the issue?
Last edited by KCfromNC; 01-23-2008 at 07:53 AM..
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