A couple of things: 1. That's why I put in the loan starting date in my original post because I had to cut off some querystrings in the URL as it was already too long. I didn't think it would be too hard for people to click on 3 dropdown boxes to select the date.
2. Should I be looking at the savings at the end of year 1 or at the end of the loan? I think that's basically my question in my original post because those 2 things obviously give different results. I'm asking this because if you look at the loan payoff date after paying 12K after Year 1, it's now 12/2035 instead of the original 09/2037 (21 month difference) when the amount you paid was equivalent to 4 months worth of payment ($2997.75 monthly mortgage X 4). Obviously, the savings is more than $613.66 for the life of the loan. But that's because of the 12K prepayment, I still don't know what the difference is if it was in monthly 1K payments. I'm definitely learning more about the effects of amortized interest vs. simple interest. Hopefully, others are too.
kamalktk said: ok, yes my math sucks, you're worse off now that I have time to sit down and do it better instead of use the simple % calc as a rough estimate. According to Bankrate, on a 500k you pay 27361.04 in interest the first year. On a 500k (where you prepay 12k on day one via the HELOC) you paid 26747.38 in the year, for a total of $613.66 you saved in interest on the primary. However, you paid paid $690.99 on the HELOC, and you still owe 690.99 on the HELOC on day 365... The fact you pay simple % on the HELOC instead of compound on the primary doesn't really matter because on year 2 day one you presumably draw the HELOC up by 12k again and start the process over. The benefit is you paid 12k on the HELOC over the year, and that's 12k extra you paid to reduce your principal.
kamalktk said: anthonyu said: Thanks for the response. I'd like to do what you proposed (calculate monthly 1K payments) but cannot find the formula to do so. I'm pleading ignorance and laziness here, but do you have a link to something that will allow me to re-calculate the principal after making each extra payment? Bankrate's calculator allows you do do that. Simply enter 1k in the "to your monthly mortgage payment" amount. (you finish your 500k loan in a 22 years, 5 months)
That's if you added $1K every month until it's paid. I'm more looking for paying $1K monthly for a period of 1 year (ex. months 13-24 or 25-36). I'm doing a yearly increment to simplify the comparison.
PS. I'm not trying to be a troll or to pick on you. I just want some kind of discussion/calculation without the $3500 software BS. Everyone has been asking for an actual calculation so here is my attempt at one. I'm looking more into the concept and not the software. Thanks for taking the time to read my post and doing your own research.
If you are looking at the concept of offset accounts vs. this particular UFF software, the best place to post is in the offset account FAQ
As Ive stated in the OP there, the majority of the loan term shortening comes via the additional principal payments. The HELOC payment timing tricks (with max FWF-style games to reduce HELOC average daily balance) at best result in a TINY reduction, and may net someone maybe $10-20 savings per month at best, assuming its done perfectly. Your monthly deposits to the HELOC would have to be HUGE ($50-100k per month) to see a meaningful reduction in ADB, and consequently any worthwhile reduction in interest paid.
Now, there are ways to accomplish this (using 0% AOR money, etc) to reduce ADB quite a bit, but what these promoters are pushing (just dump your $3000-8000 monthly paycheck into the HELOC) will NOT result in decent savings.
anthonyu said: A couple of things: 1. That's why I put in the loan starting date in my original post because I had to cut off some querystrings in the URL as it was already too long. I didn't think it would be too hard for people to click on 3 dropdown boxes to select the date.
2. Should I be looking at the savings at the end of year 1 or at the end of the loan? I think that's basically my question in my original post because those 2 things obviously give different results. I'm asking this because if you look at the loan payoff date after paying 12K after Year 1, it's now 12/2035 instead of the original 09/2037 (21 month difference) when the amount you paid was equivalent to 4 months worth of payment ($2997.75 monthly mortgage X 4). I'm definitely learning more about the effects of amortized interest vs. simple interest. Hopefully, others are too.
kamalktk said: ok, yes my math sucks, you're worse off now that I have time to sit down and do it better instead of use the simple % calc as a rough estimate. According to Bankrate, on a 500k you pay 27361.04 in interest the first year. On a 500k (where you prepay 12k on day one via the HELOC) you paid 26747.38 in the year, for a total of $613.66 you saved in interest on the primary. However, you paid paid $690.99 on the HELOC, and you still owe 690.99 on the HELOC on day 365... The fact you pay simple % on the HELOC instead of compound on the primary doesn't really matter because on year 2 day one you presumably draw the HELOC up by 12k again and start the process over. The benefit is you paid 12k on the HELOC over the year, and that's 12k extra you paid to reduce your principal. 1. no problem then. 2. This is different than rent vs own calculations where short term one is better, long term the other. If it's going to work over the whole loan and increase payoff speed, it's going to work over any period of the loan, 6 months, a year, 10, full term. So there's no need to look at the end of the loan.
I agree 100% and I actually participated in the original FAQ. I guess I'm just trying to quantify what would be saved by adding the HELOC component using the scenario/loan setting that was being bounced around earlier in this thread. If we can't get to that amount, I guess I'll leave it at that. I'll just post again if I find a useful formula. Thanks.
SUCKISSTAPLES said: If you are looking at the concept of offset accounts vs. this particular UFF software, the best place to post is in the offset account FAQ
As Ive stated in the OP there, the majority of the loan term shortening comes via the additional principal payments. The HELOC payment timing tricks (with max FWF-style games to reduce HELOC average daily balance) at best result in a TINY reduction, and may net someone maybe $10-20 savings per month at best, assuming its done perfectly. Your monthly deposits to the HELOC would have to be HUGE ($50-100k per month) to see a meaningful reduction in ADB, and consequently any worthwhile reduction in interest paid.
Now, there are ways to accomplish this (using 0% AOR money, etc) to reduce ADB quite a bit, but what these promoters are pushing (just dump your $3000-8000 monthly paycheck into the HELOC) will NOT result in decent savings.
dosun said: brushwood said: That's the part that makes no sense. You pay down the principal while at the same time incurring an equivalent amount of debt at a higher interest rate. How is that a good thing? Why not get another HELOC to pay off the first HELOC. That way you would save even more money. And then if you really wanted to shave a few years off of your mortgage you could get a third HELOC and use that to pay down the 2nd HELOC's principal. I'll get cracking on the software right now. Since it will be so much more efficient I am going to have to charge $4,500 for it though. Your forgot taking cash advances from your credit cards. Think of all the interest you can save on your mortgage then!
Why is that a good thing? Its not a good thing and that is not how the MMA works for the 10000000000 time! not talking about you brushwood.
one more time...
LOL! What a bunch of childish fools! You never listen to me, if you go back way back in this thread I answered your question already and none of you put it together yet! Look at you guys LOL, repeating the way an MMA does not work again and again.
You almost got there from my last post, but you were all too busy making your childish jokes you missed it again… so ONE MORE TIME!
A HELOC at 10% yes 10% just to prove a point, the line of credit taken out $70,000.00 GOT THAT?
Oh I will go slowwwwwly now… first of all you don’t use the whole $70,000.00 duhhh! Now we are talking about maximum interest cancellation do all you geniuses understand that? Don’t answer I do not want to distract you, let’s go on…
OK month 1: a mortgage (now we all know 30 year fix right?) at $320,000 5.6% (OH! There goes the 10% compare to 5.6% interest brain fart coming from all of you I can smell it). Joe (remember average Joe) gets paid monthly the poor average Joe and his wife taking home about $1,500.00 a week $6,000.00 a month, Joe and family has bills so he has about $1,000 in discretionary income (these are rough numbers don’t give me any lip about his bills and crap, keep reading). GOT THAT Now listen closely here is where you MISS IT.
Back to month 1: The program says put let’s say $4,000.00 to the mortgage (the program already knows Joes bills) here it comes!!! Joe uses the HELOC to and pays the $4,000 how much does Joe pay in interest on $4,000? A whopping $33.33 (do you now how I got $33.33 tell me?)
OH you ask why does Joe need the HELOC he can pay it directly, he has the money? Yes and he also has bills to pay and he has his humble lifestyle to live, he can’t just dump $4,000 into the mortgage, well he can but he will not do that, but now he has this program and he trust it, its telling him every day how he will be out of his mortgage in such a such year as long has he does what it says to do and he also tells the program all his finances, his raises, his tax return, his expense on food, clothing, entertainment, oh he sees if he buys that 51 inch flat screen he will gain X amount on his mortgage in years and loose X amount in savings (not making money dummies saving, you got that) so he changes his mind. As his income goes in the HELOC his money is working for him AND HE DOES’NT FEEL A THING! NORMAL LIVING BUT NOW smarter saving money frugal living now lets go on….
HOW MUCH DOES JOE SAVE IN INTEREST PUTTING DOWN $4,000 TO THE MORTGAGE JUST FOR THAT ONE MONTH? A LOT! Go ahead you bankrate program guru’s tell me. And how much time did he take off his term?? A nice piece of time. (GOT THAT) So compare the interest paid on the HELOC to the interest saved on the mortgage, that is where the rate does not matter (PLS don’t give me the idiot 30% 400% rates don’t matter dribble nonsense, you know what I mean give me a break!)
NOW WAIT.. it’s not over, I have to explain the obvious to you guys so I will not get one of your quotes with you little funny remarks. Are you all still with me
YES, Joe has to pay that $4,000 it does not magically appear (wish I did not have to say that) he wants to keep the HELOC at zero he pay the $33.33 in interest from borrowing the money… SO HE PAYS IT WHEN THE PROGRAM TELLS HIM as he is paying his bills at the LAST MOMENT including his mortgage, you know that trick right, you told me it 1000 times! (do I have to explain this part)
OH NO STUPID JOE you will say, he could have invested that or you will say OH he has to pay $4,000.00 every month!???
NOOO!, next month he pays the mortgage and he uses the HELOC to pay his bills, he gets paid every week did I tell you guys that already. Now the program then tells you the right day and to pay a chunk (a chunk meaning like the $4,000.00 it may be less, the program is smart it knows) so it could be 2 months later or 3, I don’t know…. Yup I don’t but the program knows how to maximum interest cancellation! That’s the programs FULL TIME JOB, it is looking out for you penny by penny and yes it adds up, you think it does not but you cannot calculate it but you know it adds up. Program is working hard for you, it’s a program it can do that with no sweat, Can you? Sure you can go do it, lets go on..
In conclusions, my FW rocket scientist this is how Joe pays off his mortgage early and saves thousands.
Canceling interest is exactly the same as earning interest to the penny.
PLEASE NO MORE INVESTMENT COMPARISONS and PLEASE NO MORE HOW MUCH I CAN GET WITH THE $3,500 I spent on the program, its lame compare to the money I am saving on interest. And someone had a great point, AND MOST IMPORTANT… YES life is great without the mortgage bill, ITS AWESOME! How do I know, I need only imagine and in only 9.6 years, trust me that goes by FAST…
You never got it because you are all SO unimaginative, corny (not funny) clowns! It is not in my character to be so obnoxious and nasty but you guys asked for it, you seem to love it and feed on it so BACK AT-CHA!
YES, Joe has to pay that $4,000 it does not magically appear (wish I did not have to say that) he wants to keep the HELOC at zero he pay the $33.33 in interest from borrowing the money… Remember this software is supposed to work without any extra prepayments on the mortgage, so what follows is the theoretically perfect case of using the UFF software, using E101's numbers from his post above, a 320k mortgage and a monthly income of 6k:
On the first of the month, Joe draws his HELOC to pay towards the mortgage. He then deposits his paycheck, he gets paid his entire month's salary on the first of the month, instead of getting paid 1500 a week. The net result is his HELOC is zero. But Joe has bills, somehow he manages to pay all the bills on the last day of the month, so he pays zero interest for the HELOC in the first month. I think we can all agree that's maximally advantageous, he pays zero interest on the HELOC in the first month. He deposited his entire paycheck into the HELOC, so he must draw from the HELOC to pay all his bills. At the end of the month, his HELOC is not zero, it's the size of his paycheck, 6,000.
At the beginning of month two, he starts with a HELOC equal to his paycheck. His paycheck is deposited and he is back to zero. Since the idea is to keep the HELOC at zero, he can not draw from the HELOC to pay any more against the primary mortgage.
Since this is theoretically perfect, he has managed to float $6000 interest free for the entire term of the primary mortgage. This is almost equivalent to simply prepaying $6000 (except for the fact that you owe $6000 on the HELOC at the end of the loan.
Here is the bankrate calculation of this. It has cut 15 months off the mortgage. link. However, at the end of the mortgage, $6000 is still owed on the Heloc, continuing with $1837.05 payments (the amount that Joe was paying on the loan), it takes a little more than three months to pay off, effectively reducing the advantage to less than 12 months.
However, the program itself cost $3500. And since that money could have been used to prepay the mortgage, we need only look at the difference between $6,000 and $3500 as prepayments. Here's the chart with a $3500 prepayment, link, as you can see the mortgage is paid off 9 months early in this scenario.
So, Joe has traded $2500 now, for roughly (3 payments x $1837.05 payment/month equals) $5511.15, in 29 years. A rate of return of on his investment of $2500 was slightly under 2.73%, compounded monthly link. This is the theoretically perfect case, assuming no interest is ever paid on the HELOC.
I can only hope that this program leads E101 to put more discretionary salary into his mortgage, instead of buying more scams. If that happens, it will "save" OP money in the same way that avoiding temptation to run up credit cards helps Ramseyites.
E101 said: It is a prepayment program, however most people do not have extra money to put into their mortgage (DO YOU GET THAT).Very good, then I have a simple question perhaps you can help me with:
When you get the program and put in all the information, BUT SET DISCRETIONARY INCOME TO ZERO, how much sooner is the loan paid off (including the HELOC) ?
The most obvious example of the "smoke and mirrors" in E101s latest posting (and what many UFF scammers keep repeating) is the comparison between the LIFETIME (360 month) interest savings of a mortgage prepayment vs. paying just ONE MONTH of heloc interest if you move the mortgage balance to the HELOC.
Sorry E101, but unless you are magically creating extra money with that MMA program of yours to PAY OFF THE HELOC within 1 month, comparing 1 month interest paid on a HELOC to 360 months interest saved on the mortgage is bad math. Shifting the mortgage balance to the HELOC does not save you $, especially when the HELOC is at a higher rate (unless you know some advanced concepts for making huge HELOC payments at no cost each month).
Of course, you and the AVERAGE JOE, dont know the FWF tricks to actually send MONEY THAT IS NOT OURS to paydown a HELOC midmonth, but many people in this forum DO know how to send tens of thousands to their HELOC to paydown its balance and dramatically reduce ADB (think FIA, 0% AOR, etc). But Using only a couple thousand in "discretionary funds" to paydown the mortgage or HELOC is NOT going shave years off a mortgage, and the shell game with your paycheck money is not going to make a dent.
EricGo07 said: E101 said: It is a prepayment program, however most people do not have extra money to put into their mortgage (DO YOU GET THAT).I have a simple question perhaps you can help me with:
When you get the program and put in all the information, BUT SET DISCRETIONARY INCOME TO ZERO, how much sooner is the loan paid off ?
Great question, wish I'd thought of it. Green for you Eric...
YES, Joe has to pay that $4,000 it does not magically appear (wish I did not have to say that) he wants to keep the HELOC at zero he pay the $33.33 in interest from borrowing the money… Remember this software is supposed to work without any extra prepayments on the mortgage, so what follows is the theoretically perfect case of using the UFF software, using E101's numbers from his post above, a 320k mortgage and a monthly income of 6k:
So, Joe has traded $2500 now, for roughly (3 payments x $1837.05 payment/month equals) $5511.15, in 29 years. A rate of return of on his investment of $2500 was slightly under 2.73%, compounded monthly link. This is the theoretically perfect case, assuming no interest is ever paid on the HELOC.
In other words, game over.
Just want to make something clear on this: The program keeps the HELOC at zero as often as possible (its not always at zero). What do you mean assuming no interest is ever paid on the HELOC (now I am asking a question and like kamalkta has refrained from nasty remarks I would hope that trend will follow) There is interest paid on the HELOC everytime Joe uses it every month, he pays interest but the interest saved from the large payment on the mortgage is greater, so when he pays off the HELOC, he is paying whatever the cost of the amount he took out that month equation: (amount taken out that month*rate%/12) gives us what he owes in interest, the rest my last post as you mention explains why the program is doing that for him. I just want to make that clear, if you think that is wrong, that's fine but that is what I was saying.
I have 1 question for E101 that can pretty much settle this. He says that his mortgage will be paid off in 10 years. What are the amounts of actual money from your paycheck that you have to pay in each year. There should be 10 amounts labeled Year 1-$xx,xxx, Year 2- $xx,xxx and so on. Not the amounts form the Heloc but the actual amounts that are going from your checking to paying either the mortgage or HELOC.
nvm, I misread E101s long post. If Joe does pay 4000 into his mortgage out of his 6000 salary, then yes its possible to pay off the mortgage in 10 years. Why do I need the HELOC and a $3500 piece of software to do this again?
I'm still missing the part where JOE suddenly cuts his 30 year mortgage down to 10 years with his $6000 monthly salary. Care to explain that?ive got a better system...send evry penny ($72,000 per year) to the mortgage. Home paid off in less than 5 years.
How do you pay your other bills, you may ask? Find a friend with good credit who is planning on moving to Poland. If you dont know anyone like this, Im sure you can find one for LESS than the $3500 software fee.
why in the world does the fallacy of this thing people call 'amortized interest' persist? Amortization is a loan schedule. The word literally means 'to liquidate or extinguish'. It is a payment schedule, nothing more. The interest on a conforming mortgage is simple interest. If I have a mortgage with a balance of 100k @ 6% my interest will be $500 this month. If I put 100k in FNBO @ 6% they will pay me $600. The interest is paid in full each month. It does not compound. Of course it is easy for me to see that with my interest only mortgage. My mortgage balance is the same as the amount that I borrowed as I pay the interest in full at the end of each month.
WalStMonky said: why in the world does the fallacy of this thing people call 'amortized interest' persist? Amortization is a loan schedule. The word literally means 'to liquidate or extinguish'. It is a payment schedule, nothing more. The interest on a conforming mortgage is simple interest. If I have a mortgage with a balance of 100k @ 6% my interest will be $500 this month. If I put 100k in FNBO @ 6% they will pay me $600. The interest is paid in full each month. It does not compound. Of course it is easy for me to see that with my interest only mortgage. My mortgage balance is the same as the amount that I borrowed as I pay the interest in full at the end of each month. Agreed that interest is interest whether it is on a credit card, auto loan or mortgage. The main point on an amortization schedule is that you pay the same amount each month (even if you happen to make an extra payment the month before). In the 500K mortgage example, you pay 3K every month even if you decided to pay an extra 12K. You save interest on the reduced principal (12K less) for the remaining life of the loan. Thus, some may think that you only saved $720 in interest (12K * 6%) if you paid 12K after Year 1. In reality, you saved $52K in interest for the life of the loan (according to Bankrate). So you're right that it's not simple vs. amortized interest. It actually is the wrong assumption of computing interest saved based on 1 year vs. computing actual interest saved for the life of the loan.
Even the Mortgage Professor may have made a similar assumption when he said: Assume the borrower’s monthly paycheck is $8,000, and on the first day of the month he does the following: a) Draws $8,000 on his HELOC which is used immediately to reduce his mortgage balance, and b) applies his paycheck of $8,000 to pay down the HELOC. On day 2, therefore, his HELOC balance is zero and his mortgage balance is lower by $8,000.
As the month progresses, he pays his expenses by drawing on the HELOC, and the HELOC balance gradually rises to $8,000. However, the average balance will only be about $4,000. For the month as a whole, therefore, he has saved interest on $8,000 of the mortgage while incurring interest on $4,000 of the HELOC. Assuming both are priced at 6%, he has saved $4,000 x .06/12, or $20. Over a year, that adds to $240. Of course, if the paycheck is $16,000 instead of $8,000, the number will be $480, and if the paycheck is $4,000 the number will be $120. A few months later, he added a postscript at the bottom of the same page and said: A ton of mail has come in on this article, some from people selling the MMA on commission, and some from borrowers who want to believe. Questions have been raised about my back-of-the-envelope calculation of the benefits, and I have to concede that my figures are rough. It is possible that I understated the magnitude of the benefit. However, I cannot get anyone from UFF to give me a copy of the program so I can test it more rigorously, and I am not going to pay $3500 for it. That's why I went on a quest to find out how much is actually being saved using the loan parameters outlined in the previous posts. I think I'm able to estimate the savings using Excel. Is there any site where I can use to upload an Excel spreadsheet?
To E101, I appreciate that you stay out of this mini-topic in this thread. You are combining the $3500 software with the concept/benefits and people will never agree with you because we will never pay $3500 no matter what the benefits are if we can replicate/simulate it for free. I'm trying to quantify the benefits without the software to find out if it's worth replicating at all.
Since everyones been beating this to death in a single thought process but makes no relation to other products in the world. One thats been around a long time accelerates a mortgage but no one claims its a scam. Can anyone explain what part that makes a Bi-weekly mortgage effective is expanded upon by the MMA that makes it work?
Fargo said: Since everyones been beating this to death in a single thought process but makes no relation to other products in the world. One thats been around a long time accelerates a mortgage but no one claims its a scam. Can anyone explain what part that makes a Bi-weekly mortgage effective is expanded upon by the MMA that makes it work?There is nothing that MMA adds. Paying more principle earlier. MMA is a step backwards because it takes the concept and
1) Requires that you pay $3500 for software 2) Requires that you pay interest on a HELOC
anthonyu said: WalStMonky said: why in the world does the fallacy of this thing people call 'amortized interest' persist? Amortization is a loan schedule. The word literally means 'to liquidate or extinguish'. It is a payment schedule, nothing more. The interest on a conforming mortgage is simple interest. If I have a mortgage with a balance of 100k @ 6% my interest will be $500 this month. If I put 100k in FNBO @ 6% they will pay me $600. The interest is paid in full each month. It does not compound. Of course it is easy for me to see that with my interest only mortgage. My mortgage balance is the same as the amount that I borrowed as I pay the interest in full at the end of each month. Agreed that interest is interest whether it is on a credit card, auto loan or mortgage. The main point on an amortization schedule is that you pay the same amount each month (even if you happen to make an extra payment the month before). In the 500K mortgage example, you pay 3K every month even if you decided to pay an extra 12K. You save interest on the reduced principal (12K less) for the remaining life of the loan. Thus, some may think that you only saved $720 in interest (12K * 6%) if you paid 12K after Year 1. In reality, you saved $52K in interest for the life of the loan (according to Bankrate). So you're right that it's not simple vs. amortized interest. It actually is the wrong assumption of computing interest saved based on 1 year vs. computing actual interest saved for the life of the loan.
Even the Mortgage Professor may have made a similar assumption when he said: Assume the borrower’s monthly paycheck is $8,000, and on the first day of the month he does the following: a) Draws $8,000 on his HELOC which is used immediately to reduce his mortgage balance, and b) applies his paycheck of $8,000 to pay down the HELOC. On day 2, therefore, his HELOC balance is zero and his mortgage balance is lower by $8,000.
As the month progresses, he pays his expenses by drawing on the HELOC, and the HELOC balance gradually rises to $8,000. However, the average balance will only be about $4,000. For the month as a whole, therefore, he has saved interest on $8,000 of the mortgage while incurring interest on $4,000 of the HELOC. Assuming both are priced at 6%, he has saved $4,000 x .06/12, or $20. Over a year, that adds to $240. Of course, if the paycheck is $16,000 instead of $8,000, the number will be $480, and if the paycheck is $4,000 the number will be $120. A few months later, he added a postscript at the bottom of the same page and said: A ton of mail has come in on this article, some from people selling the MMA on commission, and some from borrowers who want to believe. Questions have been raised about my back-of-the-envelope calculation of the benefits, and I have to concede that my figures are rough. It is possible that I understated the magnitude of the benefit. However, I cannot get anyone from UFF to give me a copy of the program so I can test it more rigorously, and I am not going to pay $3500 for it. That's why I went on a quest to find out how much is actually being saved using the loan parameters outlined in the previous posts. I think I'm able to estimate the savings using Excel. Is there any site where I can use to upload an Excel spreadsheet?
To E101, I appreciate that you stay out of this mini-topic in this thread. You are combining the $3500 software with the concept/benefits and people will never agree with you because we will never pay $3500 no matter what the benefits are if we can replicate/simulate it for free. I'm trying to quantify the benefits without the software to find out if it's worth replicating at all.
OK, that's fine with me, I will be more than happy to stay out, just let me know when you replicate/simulate it for free and quantify the benefits without the software.... Agreeing with me was never my point, proving that the MMA saves and is not a scam is my point, I am sure you will find that it is worth the cost.
E101 said: Agreeing with me was never my point, proving that the MMA saves and is not a scam is my point, I am sure you will find that it is worth the cost.Why are you sure this is worth $3500? Even if you are in a circumstance where the opportunity cost was worth it, and the HELOC is low enough to justify the approach, how in the world can you say spending $3500 on simplistic software is worth it?
Whats funny(sad?) is that several of the MMA believers who have come to this forum preach its virtues HARD, then later admit they have just started!
They were basically brainwashed with the marketing spiel and had a calculation run for them, yet they havent even worked with the magic software for any length of time. yet they claim to know its the best out there, without question.
This kind of blind faith is repeated in many financial scams, like HYIPs, MLM, etc
YES, Joe has to pay that $4,000 it does not magically appear (wish I did not have to say that) he wants to keep the HELOC at zero he pay the $33.33 in interest from borrowing the money… Remember this software is supposed to work without any extra prepayments on the mortgage, so what follows is the theoretically perfect case of using the UFF software, using E101's numbers from his post above, a 320k mortgage and a monthly income of 6k:
So, Joe has traded $2500 now, for roughly (3 payments x $1837.05 payment/month equals) $5511.15, in 29 years. A rate of return of on his investment of $2500 was slightly under 2.73%, compounded monthly link. This is the theoretically perfect case, assuming no interest is ever paid on the HELOC.
In other words, game over.
Just want to make something clear on this: The program keeps the HELOC at zero as often as possible (its not always at zero). What do you mean assuming no interest is ever paid on the HELOC (now I am asking a question and like kamalkta has refrained from nasty remarks I would hope that trend will follow) There is interest paid on the HELOC everytime Joe uses it every month, he pays interest but the interest saved from the large payment on the mortgage is greater, so when he pays off the HELOC, he is paying whatever the cost of the amount he took out that month equation: (amount taken out that month*rate%/12) gives us what he owes in interest, the rest my last post as you mention explains why the program is doing that for him. I just want to make that clear, if you think that is wrong, that's fine but that is what I was saying. I gave you the theoretically best case for the UFF program, Joe pays nothing all month and then all his bills for the month on the last day of the month. His average daily balance is small, so I've rounded the interest he owes to zero, which is better for your case since it's not actually zero.
hate2work said: EricGo07 said: E101 said: It is a prepayment program, however most people do not have extra money to put into their mortgage (DO YOU GET THAT).I have a simple question perhaps you can help me with:
When you get the program and put in all the information, BUT SET DISCRETIONARY INCOME TO ZERO, how much sooner is the loan paid off ?
Great question, wish I'd thought of it. Green for you Eric... I already answered that here using a theoretically perfect case.
Fargo said: Since everyones been beating this to death in a single thought process but makes no relation to other products in the world. One thats been around a long time accelerates a mortgage but no one claims its a scam. Can anyone explain what part that makes a Bi-weekly mortgage effective is expanded upon by the MMA that makes it work? You make extra payments via a bi-weekly mortgage. Since there are 52 weeks a year, you make 26 biweekly payments. Each bi-weekly payment is half of a monthly payment, so you effectively make 13 monthly payments every year. Paying extra on the principal doesn't require $3500 software.
ellory said: E101 said: Agreeing with me was never my point, proving that the MMA saves and is not a scam is my point, I am sure you will find that it is worth the cost.Why are you sure this is worth $3500? Even if you are in a circumstance where the opportunity cost was worth it, and the HELOC is low enough to justify the approach, how in the world can you say spending $3500 on simplistic software is worth it?
Very shortsighted there. Who are you to put a value on what something is worth to someone else. Now if he said that if you don't spend $3500 you can't save more then so be it, but he didn't. He said that he spent $3500 which will allow him to pay his house off in 10 years. Maybe it is worth it to him to spend $3500 to know exactly when to pay things off so he gets his house paid off in 10 years. His goal is to pay his house off in 10 years and this allows him to do this. Can you write your own will? Yes. Do people pay to have their will written for them? Yes. Did they waste money? Maybe to you they did. Is wine worth $100 a bottle? To some yes, to some no. Would you spend $2000 on a purse? My wife would. I think it is ridiculous.
So for you to ask "Why are you sure this is worth $3500? is not really the question. "Why is it worth $3500 to you when you can do it yourself for free?" should be the question. If it saves him time and headaches then it may well be worth it. If $3500 allows him to reach his goal and he is OK with that then fine by me.
mike, i would completely agree with what you are saying, but he believes this $3500 program will do more than it actually does (ie, time things such that he saves 20 years of payments without significantly increasing what he pays from his own pocket). this program actually has the strong potential to cost him MORE money by using a HELOC at a higher rate.
kamalktk said: Fargo said: Since everyones been beating this to death in a single thought process but makes no relation to other products in the world. One thats been around a long time accelerates a mortgage but no one claims its a scam. Can anyone explain what part that makes a Bi-weekly mortgage effective is expanded upon by the MMA that makes it work? You make extra payments via a bi-weekly mortgage. Since there are 52 weeks a year, you make 26 biweekly payments. Each bi-weekly payment is half of a monthly payment, so you effectively make 13 monthly payments every year. Paying extra on the principal doesn't require $3500 software.
So what you are saying is that you don't know. I've been reading this and other forums while doing research on these type of programs talking to users in Australia, Germany, and a couple of the original users of the MMA that have been using it for almost 3 years. Extra payments is a simple answer but not the answer, so try again.
calvinandhobbes said: mike, i would completely agree with what you are saying, but he believes this $3500 program will do more than it actually does (ie, time things such that he saves 20 years of payments without significantly increasing what he pays from his own pocket). this program actually has the strong potential to cost him MORE money by using a HELOC at a higher rate. CHobbes, compounding (no pun intended) the higher HELOC interest rate is the fact that nothing prevents the user from running the HELOC up for discretionary spending!
Fargo said: So what you are saying is that you don't know. I've been reading this and other forums while doing research on these type of programs talking to users in Australia, Germany, and a couple of the original users of the MMA that have been using it for almost 3 years. Extra payments is a simple answer but not the answer, so try again. Enlighten us oh wise new member with 2 posts both from this thread...
Fargo said: kamalktk said: Fargo said: Since everyones been beating this to death in a single thought process but makes no relation to other products in the world. One thats been around a long time accelerates a mortgage but no one claims its a scam. Can anyone explain what part that makes a Bi-weekly mortgage effective is expanded upon by the MMA that makes it work? You make extra payments via a bi-weekly mortgage. Since there are 52 weeks a year, you make 26 biweekly payments. Each bi-weekly payment is half of a monthly payment, so you effectively make 13 monthly payments every year. Paying extra on the principal doesn't require $3500 software.
So what you are saying is that you don't know. I've been reading this and other forums while doing research on these type of programs talking to users in Australia, Germany, and a couple of the original users of the MMA that have been using it for almost 3 years. Extra payments is a simple answer but not the answer, so try again. What I'm saying is I've done the math, and linked to places where you can see it for yourself (this page and the previous page). I even tilted the odds as far as possible in the MMA software's favor by using a theoretically perfect example of the software managing the money. Done completely perfectly, it does worse than simply sticking the money you'd spend on the program in a CD, money market fund or other savings account. The only way this software works is by prepaying your mortgage, and the software isn't necessary to do that.
Fargo said: So what you are saying is that you don't know. I've been reading this and other forums while doing research on these type of programs talking to users in Australia, Germany, and a couple of the original users of the MMA that have been using it for almost 3 years. Extra payments is a simple answer but not the answer, so try again.Another shill. Sounds just like you, E101. Knowing nothing about how it supposed to work yet attacks anyone who shows how it really are worthless MLM sales pitch.
ellory said: Fargo said: Since everyones been beating this to death in a single thought process but makes no relation to other products in the world. One thats been around a long time accelerates a mortgage but no one claims its a scam. Can anyone explain what part that makes a Bi-weekly mortgage effective is expanded upon by the MMA that makes it work?There is nothing that MMA adds. Paying more principle earlier. MMA is a step backwards because it takes the concept and
1) Requires that you pay $3500 for software 2) Requires that you pay interest on a HELOC
mikef07 said: Very shortsighted there. Who are you to put a value on what something is worth to someone else. Now if he said that if you don't spend $3500 you can't save more then so be it, but he didn't. He said that he spent $3500 which will allow him to pay his house off in 10 years. Maybe it is worth it to him to spend $3500 to know exactly when to pay things off so he gets his house paid off in 10 years. His goal is to pay his house off in 10 years and this allows him to do this. Can you write your own will? Yes. Do people pay to have their will written for them? Yes. Did they waste money? Maybe to you they did. Is wine worth $100 a bottle? To some yes, to some no. Would you spend $2000 on a purse? My wife would. I think it is ridiculous.
So for you to ask "Why are you sure this is worth $3500? is not really the question. "Why is it worth $3500 to you when you can do it yourself for free?" should be the question. If it saves him time and headaches then it may well be worth it. If $3500 allows him to reach his goal and he is OK with that then fine by me. Would you pay $3500 for a placebo? I agree there everybody values products at a different level, but this product is nothing but as someone else said a "glorified calender". A simple mortgage calculator from anywhere can tell you how much you would need to pay if you want to end your mortgage in X amount of years. Does the program work? Of course it does in the same way a mortgage calculator works which can be obtained for free and you'd get similar results using 5 minutes of your time.
fargo, everyone here (minus the MMA/MLM/etc brainwashed idiots) knows that a bi-weekly mortgage plan pays your mortgage faster my effectively making 1 extra montly payment per year (26 half payments versus 12 full payments). You can say that's not the answer, but it's been proven mathematically over and over and over that, it is infact, the correct answer.
Fargo said: ellory said: Fargo said: Since everyones been beating this to death in a single thought process but makes no relation to other products in the world. One thats been around a long time accelerates a mortgage but no one claims its a scam. Can anyone explain what part that makes a Bi-weekly mortgage effective is expanded upon by the MMA that makes it work?There is nothing that MMA adds. Paying more principle earlier. MMA is a step backwards because it takes the concept and
1) Requires that you pay $3500 for software 2) Requires that you pay interest on a HELOC
Thats not answering my question. Try again. Your question is "what makes it work?". The answer is mu, because it does not work. The math is here link, tilted as heavily as I could make it in the MMA software's favor.
Fargo said: ellory said: Fargo said: Since everyones been beating this to death in a single thought process but makes no relation to other products in the world. One thats been around a long time accelerates a mortgage but no one claims its a scam. Can anyone explain what part that makes a Bi-weekly mortgage effective is expanded upon by the MMA that makes it work?There is nothing that MMA adds. Paying more principle earlier. MMA is a step backwards because it takes the concept and
1) Requires that you pay $3500 for software 2) Requires that you pay interest on a HELOC
Thats not answering my question. Try again.I'll bite. Enlighten us. What, beyond a waste of money, does MMA add?
kamalktk said: hate2work said: EricGo07 said: E101 said: It is a prepayment program, however most people do not have extra money to put into their mortgage (DO YOU GET THAT).I have a simple question perhaps you can help me with:
When you get the program and put in all the information, BUT SET DISCRETIONARY INCOME TO ZERO, how much sooner is the loan paid off ?
Great question, wish I'd thought of it. Green for you Eric... I already answered that here using a theoretically perfect case.I've done the same. But until the software program spits out a number, Fargo and E101 are not going to believe anything else. They will just skim over our posts, and tell themselves that we have calculated incorrectly, ... or not included some magic that the 'system' knows about.
btw, I tried to use the free online 'analysis' that was linked to earlier in the thread. I couldn't get past putting $0 in the discretionary salary field. Huh. Imagine that.
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