For the FINANCE BUFFS - anyone heard of this mortgage payoff strategy ??

Hello,

First let me clear the air a bit, this is not SPAM and I'm not involved in any way with this company.

Having said that check out their Mortgage payoff strategy by using your HELOC


Here is the link to their presentation (is about a 50 minute one but you can forward it to get to the actual strategy
part) -

http://e-qualjustice.net/MMA/KitayaBrady/MMAoverview/MMAoverview.html

Here is a link to their site -

9YearMortgage.com

Seems a bit too good to be true, what would be some of the risks not mentioned in the presentation ?

My thoughts are if interest rates were to spiral out of control like in the 80s to double digits . . .

Any thoughts ??


ADDED -

Ok in a nut shell what they do is take out a HELOC and start making big payments into the FIXED mortgage, they then start paying down the HELOC and then repeat the process, it is supposed to eliminate years of the 30 year mortgage and they have a software so you can track when it will be paid off (they aim for 12-15 years) using the leveraged HELOC account.

Before we all go willy-nilly checking out links to who knows what, how about a summary? If their solution is to start a porn website then it would be good to know before popping it up.

This looked suspiciously spammy... but then I checked your registered date: Monday, August 27th 2001 3:19 PM

So, probably not spam. Still giving you red though until you give us a lot more details so we don't have to go watch a 50 minute presentation just to answer your q.

Does the software cost you $3500 ?
Or maybe this place will charge you only $50? Or maybe $10,000 .. what's the cost? I'm not going to bother going there.

Sounds like that "Scam? United First Financial Money Merge Account". Paypal me $50 and I can summarize you that thread.
United First Financial - $3500 for a whiff of their fart

Achilles22 said: Yes to me paying for the software is a scam, my question is how valid is the idea of paying of your mortgage using a HELOC as a tool ???

Rewind:

doerrb said: Please search before you post.

MMA

Money Merge Account

There are several threads from just the last week on this topic.

Thanks.

Apparently the "Search" box needs to be MUCH larger.

talljay said: Apparently the "Search" box needs to be MUCH larger.

If they could just get it to flash and call out "Try Me!"

Achilles22 said: Yes to me paying for the software is a scam, my question is how valid is the idea of paying of your mortgage using a HELOC as a tool ???

There is a little validity to the idea, however, in many cases the higher ADJUSTABLE HELOC can kill the potential savings. The idea about the HELOC compounding interest daily vs. the mortgage sticking to a fixed amortization regardless of when the payment is made does make sense, but once you throw rates into the equation it changes. If by some miracle you could get a fixed HELOC equal to your mortgage rate then, yes, you'd have a winner.

There are many threads here though on why paying down a low, fixed-rate mortgage can be a bad idea (check out the Dave Ramsey review thread for a detailed explanation). Although, if you are disciplined enough and paying off your mortgage fast is your goal, you could do what this program does and have less money come out of your pocket if you took out a reasonable chunk of money (that you are able to pay back in 12 mos) on a 0% BT for 12 months, chucked that money at the mortgage, and then socked 1/12 of the BT amount in a high yield savings, then at the end of the 0%, pay off the credit card with your savings, rinse, and repeat.

I also plugged the $3,500 this scam company charges for the software into a bankrate calculator and using myself as an example, throwing $3,500 directly at my mortgage rather then buying crappy software knocks 15 months off the end of my mortgage, saving about $16k. However, these simplified equations don't factor what ELSE I could do with the $3,500 that could yield an even higher ROI than making a payment on my 6% mortgage.

Thanks for the constructive answer !

berlinsmommy said: Although, if you are disciplined enough and paying off your mortgage fast is your goal, you could do what this program does and have less money come out of your pocket if you took out a reasonable chunk of money (that you are able to pay back in 12 mos) on a 0% BT for 12 months, chucked that money at the mortgage, and then socked 1/12 of the BT amount in a high yield savings, then at the end of the 0%, pay off the credit card with your savings, rinse, and repeat.

Lost on this. Seems like shells rattling... what am I missing?</blockquote></blockquote>

First of all, if you never heard of or don't know much of this so-called MMA account, then you might want to invest your 50 mins spare time to look through the presentation (well, many folks on this forum have wayyyyyyy toooooooo much free time anyway )
Second of all, this is not a spam, the concept/principle of MMA account is solid and has been become a reality (in Europe, but surpisingly rare in US)
And, it is not too good to be true, MMA account is no magic, it just shows how BADLY the tradition mortage system is built up: "front-end load" interest ("badly" is from borrower's point of view, in fact, it's just a pure mathematic effect). Longer the mortage term is, more "sensitive" it will be the "early payment", that's why when you "invest" $5000 in the first month, you will get "$23000" back in the future (although 30 years later!). But the BEST part of it is: you don't pay this $5000 from your own pocket, you borrow it! (otherwise it's no different than PREPAY your mortage) However, this time it's not a 30 year loan of $5000, it's probably just a 1 year loan so you won't end up paying $23000 in interest. What if you really have an extra $5000? you pay $5000+5000 then! (or invest $5000 somewhere else if you think you can get more than $23000 in return, hey, it's not that difficult, that's $23000 in 30 years!!!)
As others have mentioned, the $5000 you borrow has a variable rate and sometimes could be high but no matter how high it is, it can't be more than 500% APR! As long as you don't have enough cash to pay everything up front, MMA can help.
Finally, $3500 "one-time" account set up fee? I think those ppl take too much credit for themselves (it's not like they are the first who invent this idea, even then...) Everyone can take out some 0% APR loans or HELOC fund or whatever relatively-low rate and short term loans to pay against their mortage, this "MMA account software" is merely a fancy way of doing book keeping with microsoft exel (nothing more, nothing less).

I don't think so, Ilikedollars.

The underlying financial reasoning is using a HELOC to take advantage of paycheck float -- meaning salary that will be spent that month, but has not been /yet/.

A high yield checking and/or savings account will do the same thing, with no headaches, no gimmicks, and no software to buy, so long as the accrued interest is paid to mortgage principal. The numbers approximately even out: The mortgage savings yield is higher, but so is the rate paid on HELOC debt.

btw, all this talk about intensive excel spreadsheeting needed to mirror the 'program' is hooey. Simple reasoning tells us that the theoretical maximum benefit from float is the paycheck floated unused until the day before the next paycheck. So E.g., if my paycheck is 5k a month on a 200k mortgage, the best float scenario is equivalent to a mortgage of 195k. If my average salary 'balance' is $2500, my mortgage equivalent is $197.5k. In practice it will be less of course, because one must choose either a HYS account or equivalent that surely has an interest yield less than the mortgage note, or go the HELOC route which incurs interest debt /*at least as high*/ as the mortgage note for part of the month.

As a public service, 'the plan', for free:
1. If you /*already*/ have a HELOC with a balance, send your paycheck it's way and draw down as needed. Paying off debts towards their due date rather than immediately upon receipt is beneficial.
2. Do not set up a HELOC just for this purpose, but use a HYS account or equivalent instead.Paying off debts towards their due date rather than immediately upon receipt is beneficial.

I sure hope these threads go away. They are SO inane.

particular said:
Second of all, this is not a spam, the concept/principle of MMA account is solid and has been become a reality (in Europe, but surpisingly rare in US)


Another sign of a scam. Referencing of how things are done in other country are better. I prefer the US of A. We're not a super power for being dumbarses

Forgive my ignorance, but the marvelous feat that the MMA accounts claims to accomplish could be done with a HELOC in the first lien position. Auto deposit the income, pay the things that must be paid, and if there is $15 left at the end of the month, surely I would not write a check to my mortgage company for that little, but in this case it would stay there and reduce the principal.
Am I wrong?

If it is a dumb question, say so. I am brand new, I am entitled to 1 stupid question.
Thanks
The Hun

TheHun said: Forgive my ignorance, but the marvelous feat that the MMA accounts claims to accomplish could be done with a HELOC in the first lien position. Auto deposit the income, pay the things that must be paid, and if there is $15 left at the end of the month, surely I would not write a check to my mortgage company for that little, but in this case it would stay there and reduce the principal.
Am I wrong?

If it is a dumb question, say so. I am brand new, I am entitled to 1 stupid question.
Thanks
The Hun

You're not wrong, you're exactly right. This is the essence of the "ONE" account that is not available in the US.

KellerRacing said: .... You certainly don't need a software program to tell you how to prepay a mortgage......

...I've written an 8-page memo on why this whole thing is a scam. If anyone wants a copy, let me know.
Knowing how to do it and actually doing are not the same thing.
You are right, everybody that has a mortgage knows that paying extra reduces the principal and results in early payoff and saves money and all that. The benefit of the software is that it imposes discipline on the homeowner. But as for me and my house, we can be very self-disciplined to save the $3500.
Other that the forced discipline aspect, are there any further benefits of using the magic software? I also sat through the presentation. Is the timing of extra principal payments really as critical as they make it sound? Or other than "the earlier the better" principle, it matters little.
Thanks for your response. I'd love to read your memo.
The Hun

Non homeowners can do this too!!!

Buy everything using a CC with a grace period. Deposit your paycheck in a MM. Pay the CC as late as possible but make sure to not incur any late or interest chargers.

Pocket the interest from the MM!

Send me cash in en envelope for $3500 and I'll provide software to help you do this!

KellerRacing said: Hypersion said: Send me cash in en envelope for $3500 and I'll provide software to help you do this!

So, $3,500 less $35 for a copy of Excel off eBay...net profit of $3,465. Repeat until rich!

No!

Drive to the dolar store

Notebook $1
scientific calculator $1 (A computer is just an expensive calculator.)

Net profit of $3498!!1

ILikeDollars said: Or, more likely, the opposite, where people will say "hey, we've got all of that available credit in the HELOC, let's buy some 4-wheelers!"and thats EXACTLY the crowd that will fall for this program...th type who have NO problem laying out large chunks of $$ with little thought bc someone tells them what they want to hear.

I have been sold on the math for some time now, just not the prices etc. However I have also been semi stumped by the math within excel. Anyone know the best place to collaborate on an on-line excel sheet? Or would there be any takers?
I have quite a bit done/started. Wolf17, kellerracing, electricsavant etc.???

As delzy said earlier: I'll take a stab from 20 feet back. All else remaining equal, I cannot save money by borrowing more expensive money to pay of cheaper money earlier.

It seems to me that if you could float your income to reduce interest, you could save about 30 years interest on 1/2 of one month's pay ($2.5k @6% x 30 years yielding $16250 in savings for example if they made $60k after taxes).

You would be better off to just pay the $3500 on the mortgage now. This would result in an additional $1k @ 6% for 30 years or an additional $6500 yielding $22750 total. With no extra financial management at all. Which will be less than one month's income in 30 years.

I think I'll take the $3500 and invest in something other than a reduction in tax deductible interest. I just don't see a lot of older people who are in the last couple of years of their mortgages complaining about their $115 house payment.