I did some searching a I couldn't find anything so here it goes...
My friend's husband is gullible. He'd buy a rubber liferaft in the middle of a dry lake.
He went to a seminar held by Unite First Financial concerning paying off their mortgage super fast. My friend said that they want to sell a computer program for $3500. Seems like a total scam.
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SCAM, SCAM, SCAM
Message edited by: sloth911 on 2007-03-13 15:46:15 CDT
kamalktk
Ancient Member
posted: Mar. 2, 2007 @ 12:02p
the program is likely a calculator (that will be a $3500 calculator thank you) that tells your that if you increase your mortgage payments, it will be paid off faster. Paying off your mortgage faster is a bad idea.
So yes.
ScootyPuffSr
Senior Member - 2K
posted: Mar. 2, 2007 @ 12:07p
kamalktk said: Paying off your mortgage faster is a bad idea.
If blanket answers like that were universally true we wouldn't have had an extensive thread with smart people on both sides of the discussion arguing the merits.
It is highly dependent on the situation.
Is this calculator a scam? yes, but not because paying off a mortgage faster is idea.
overclock, ScootyPuffSr and I may disagree on paying the house off early, but I think we both agree that Unite First Financial is a scam.
HowdyDew
New Member
posted: Mar. 2, 2007 @ 1:21p
While I think this United First Financial site is a tad sketchy, what they are talking about is a legitmate option, here you can find this type of account through a legit lender.
overclock
Addicted Member
posted: Mar. 2, 2007 @ 1:42p
Thanks for the replies.
Everybody is always looking for a way to reduce their mortgage term. I won't argue or debate that here. But one thing is for sure there are a lot of scams out there.
somu
Senior Member
posted: Mar. 2, 2007 @ 6:17p
It looks like scam but it will be really great if it is not.
I actually had someone approach me last week about this. It is somebody I know and trust. He is also well respected in the community. I would be surprised if he is caught up in a scam or pyramid scheme. He asked for copies of anything that I am in debt with. I gave him a copy of our mortage and two car loans. He is supposed to get back to me this weekend. He is entering my information into the program and will let me know if I really can pay off my mortgage in 13 years compared to the 28 years I have left.
I don't understand it 100% and am just looking into it. I would not do anything without 100% knowledge of the product and the approval of Fatwallet. He explained that i am opening up an interest only equity account and that I would be borrowing from it during the month, but also depositing money back into it. I will post more when I have received his results.
berlinsmommy
Senior Member - 1K
posted: Mar. 2, 2007 @ 9:29p
Hahahahaha, gotta love this (from the agent's myspace page): Would you like to become a Branch Manager and earn a substantial six figure income in commissions, overrides and bonuses? Call me or send me an email today and we'll see if you have what it takes. My email address is employment_director@yahoo.com.
and under that: Income: $60,000 to $75,000
Dracolith
Senior Member
posted: Mar. 2, 2007 @ 10:09p
From the description it looks like their 'program' is...
1. Take out a mortgage 2. Take out a HELOC 3. At the beginning of every month, transfer 1 month's worth of your paycheck (the amount of ALL the money you'll earn that month from working), minus your expenses from the LOC to the mortgage as extra principal 4. Write checks against the LOC for all your bill payments 5. Every time you get a paycheck, direct deposit & transfer the balance cover the HELOC debt.
In other words, you don't really have money in the bank, you pay everything with debt, and every dollar's immediately going to cover some debt.
There's some logic to it, but it makes little sense if the interest cost on the LOC will be higher than on the mortgage.
Maybe with a 0% BT offer it could more likely make sense to do this.
If you have BT money sitting in a savings account at only 5% interest, consider using a certain amount as extra principal on a mortgage, if say the home loan costs you 7.0% in terms of interest, your possible after-tax return from reducing that debt is maybe larger than your return from earning interest on that same money in your savings account.
The catch is, you eventually need to repay the 0% offer, so you need to have retained enough that your income over the rest of the BT term - expenses + the remaining BT funds >= the 0% debt.
thng
Addicted Member
posted: Mar. 3, 2007 @ 4:38p
visualbang said:I actually had someone approach me last week about this. It is somebody I know and trust. He is also well respected in the community. I would be surprised if he is caught up in a scam or pyramid scheme.
FWIW, trust and reputation is a common precursor to scams, frequently called affinity fraud:
But what really sold Niggeling was the hard sell by his nephew. With affinity fraud, as regulators call it, the con artist infiltrates a social group like a church or professional club, then persuades his new friends to enroll in his scheme.
Maybe the deal is legit, but maybe not. Trust, but verify, especially if it seems fishy.
dcharles
Member
posted: Mar. 3, 2007 @ 7:28p
ripoff ... hold on to your wallet ... you don't need to spend $3500 to pay down your mortgage ... indeed, if that's what you want to do, take the $3500 and send it directly to your mortgage company ...
SUCKISSTAPLES
Charter Member
posted: Mar. 3, 2007 @ 10:18p
HowdyDew provided excellent links , READ THEM.
DO NOT GIVE ANYONE $3500 to do this! You can do it for FREE by setting up a HELOC. These companies are not just making $3500 off you, they are making THOUSANDS MORE by brokering the loans they sell to you too!
Any mortgage broker can setup an identical system for you, many at no charge (they get paid from the lender).
So yes this is a SCAM.
visualbang
Member
posted: Mar. 4, 2007 @ 8:24a
So I read those links and I do feel much more informed now. I will pay anybody to give me a $3500 calculator, but SIS or anybody else, would this be worth doing ourselves or just forget this idea and pay another few hundred to the mortgage company every month.
Mortgage Balance -$130,000 - for 28 more years at 5.75% 4000 left on one car loan at 7% (around 14 payments left 12,000 on another car loan at 6% for 3 more years 13,000 in student loans at 3.75% We only have about 2000 in debt besides this but that is at 0% interest
Bought home for $150,000 but recently had it appraised for 205,000. We currently have an $8000 HELOC with a zero balance at 8%.
Should we consider doing this method? Any suggestions would be great
SUCKISSTAPLES
Charter Member
posted: Mar. 4, 2007 @ 10:59a
visualbang said:So I read those links and I do feel much more informed now. I will pay anybody to give me a $3500 calculator, but SIS or anybody else, would this be worth doing ourselves or just forget this idea and pay another few hundred to the mortgage company every month.
Mortgage Balance -$130,000 - for 28 more years at 5.75% 4000 left on one car loan at 7% (around 14 payments left 12,000 on another car loan at 6% for 3 more years 13,000 in student loans at 3.75% We only have about 2000 in debt besides this but that is at 0% interest
Bought home for $150,000 but recently had it appraised for 205,000. We currently have an $8000 HELOC with a zero balance at 8%.
Should we consider doing this method? Any suggestions would be great
read the existing threads on people considering this, using "non scam" lenders
They explain why it does NOT make sense to move from a 5.75% mortgage to a HELOC type product with rates in the 7-8% range. Since you likely wont be depositing more than $8,000 each month in earnings, you could replicate 99% of this "system" by simply paying down your HELOC with each paycheck, and drawing on it when necessary to pay bills. Simply read the threads so you understand how this works. its not magic.
KellerRacing
New Member
posted: Mar. 4, 2007 @ 4:54p
Here is my understanding of the plan.
1. Take out a HELOC. 2. Make an advance against the HELOC. 3. Apply the funds to the principal of your first mortgage. 4. Apply all of your incoming funds each month immediately to the HELOC. 5. Use the HELOC's checks to make all of your outgoing payments.
Curtailing the first mortgage by "X" dollars will shorten the number of years needed to repay, all other things being equal (that is, the payment and rate do not change).
So far, so good.
Where I see that this plan falls short is that this only works to the extent that you can keep the HELOC at or near zero principal balance (assuming that the rate on the HELOC is higher than the rate on your first). The only way that you can keep the HELOC near zero is if your average monthly balance in your checking account was the same amount that you prepaid the first mortgage by. In other words, if you took a $10K HELOC and made a lump-sum $10K payment to the first mortgage, you need to have an average collected balance in the bank of $10K to keep that HELOC at zero.
Even if you collect $10K per month in cash income each month, it's unlikely that you have a $10K collected balance. I think that most people write checks for just about whatever comes in ("paycheck to paycheck" or "hand to mouth").
The point is that you can only keep a HELOC balance to zero to the extent that you have the cash on hand each and every day. So, let's say your income is $60K per year--after taxes--you could in theory do this plan for $5K ($60K / 12 months).
Things to remember, though.
If your HELOC has any principal outstanding whatsoever, that interest expense more than offsets the interest savings on the mortgage. Also, you really don't need a HELOC to do this, if you really have the collected balances. You could just write a check to the first mortgage to curtail the loan, but then you might have a liquidity problem down the road. Above all else, I can't see why you need a $3,500 program to make this happen. You can figure all of this stuff out with Excel for free.
And if you are going to do this with only a $5K to $10K curtailment, you can shorten your first mortgage's lifespan equally by making VERY small principal curtailments each month without making a lump-sum payment. And if you have the kind of income where you are bringing home $20K-plus each month, you should be able to curtail your mortage each month without all of this shell game.
I won't get into the debate on pre-paying your mortgage. Everyone has their own comfort to take into account. Some people want to have their home paid off by the time they are "Y" years old. To each his own. My opinion, generally, is that the after-tax cost of mortgage money is so cheap that there are other places you could put your cash besides additional principal payments, but again the choice is personal.
RetirementPlanner
New Member
posted: Mar. 4, 2007 @ 9:32p
United First Financial is definately NOT a scam. I was approached too ...and was skeptical also. It sort of sounded too good to be true. But then I spent hours googling everything about this concept... as well as the company itself... and I used a mortgage calculator to verify the math... or at least as close as I could get to it.
What they are doing is a slight variation of the Current Account Mortgage. One THIRD of all mortgages (for over 10 years now) in the UK, Europe and Australia are CAM's. Richard Branson, of Virgin Airlines, launched a company called One Account, which was bought out by the Royal Bank of Scotland in 97. That mortgage has won numerous awards (found this on google).
It IS a sophisticated concept (and over the heads of some folk - by the way, Dude... interest is only one part of an equation. Higher or lower interest is a moot point until you know the principal amount and the term) ... and while there are a couple of companies here in the US doing a CAM... because of US banking laws most people cannot qualify for them (you must have excellent credit and jump through some major hoops).
United First Financial has devised a rather ingenious work-around solution which some on here described pretty accurately... money borrowed from an equity line to go to the primary mortgage... managed by a software program. Does it work better if you have more money to throw at the mortgage? Sure. But debt restructure helps a lot too. The thing that appealed to me was that it seemed like something my Average Joe clients could be successful with... without really changing anything major.
Is $3500 for the program expensive? I guess it depends on how smart you think you are. According to the company website the software was designed by a PhD aeronautics mathmatician (those guys are pretty darn accurate - ask an astronaut) and recalculates the homeowners variables with every penny going in and out. So if the algorithim shows you paying off and saving $180,000 in interest... you have to ask yourself... how much of a margin of error are you going to have compared to the software?
A 5% margin for most folks... still means the cost of the software is worth it... especially if you do not enjoy spending your weekend pouring over spread sheets and punching numbers in a calculator. The cost is not out of pocket, but out of the line of credit. So... I guess you would have to factor in the value of your time, and convenience.
I looked at their software... it would probably take about 15 minutes to update monthly... maybe a bit longer if one wanted to change some major variables. It has a cost-of-goods calculator in it also... so you can pretend you are going to make a major purchase and see how it affects your pay off. Again... something the Average Joe could wrap their head around.
All in all... I spent $4000 for my MAC and related software... and it has not saved me any money at all yet. Though it has saved me time... so I feel it was money worth spending.
Anyway..... just wanted the original post-er on here to know that her friends husband is not being gullible (though she is a good friend to be concerned). Perhaps he just did the research.
Oh... and by the way... in my opinion... this program is excellent for folks that need to better manage their finances. Many of my clients do not truly understand the real nature of consumer interest and debt... and how it is affecting their lives. I had a client recently with numerous credit card bills and a mortgage... over $46,000 in interest alone... paid in the last two years. The way they were going... they were looking at retiring at about 75, maybe 74, and that was if nothing went wrong.
With this United First Financial program... rolling their credit cards and car loan into the program restructures their debt and frees up about $450 a month. Initially they can do the program as planned, but after the line of credit is back down to almost $0, I am suggesting they also pull out a couple of hundred a month to go to a tax-free investment... and they will still have their mortgage paid off and be completely debt free in less than 14 years. Then... they can take the mortgage payment they are not paying anymore... and invest that too.
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