Wow I posted once just asking a question and already being called names. CLASSY. Mortgages are basically all the same the way you pay them back is what makes the difference. So we agree that a Bi-weekly is not a scam. Good. I told my friend to take a hike so he let me tinker with the analysis software while I was doing my research and had some surprising results. The part that is missed by most people and many Mtg Brokers like myself is that by paying every two weeks you are cancelling interest by paying two weeks early every month. The same principle that all these other programs use but increase it by leveraging a number larger than just the mtg payment split in half. This is about leveraging your money (which the wealthy do)that isnt normally being used. Simple concept but hard for most people to implement effectively.
Fargo said: Wow I posted once just asking a question and already being called names. CLASSY. Mortgages are basically all the same the way you pay them back is what makes the difference. So we agree that a Bi-weekly is not a scam. Good. I told my friend to take a hike so he let me tinker with the analysis software while I was doing my research and had some surprising results. The part that is missed by most people and many Mtg Brokers like myself is that by paying every two weeks you are cancelling interest by paying two weeks early every month. The same principle that all these other programs use but increase it by leveraging a number larger than just the mtg payment split in half. This is about leveraging your money (which the wealthy do)that isnt normally being used. Simple concept but hard for most people to implement effectively. You should read this thread before you post. The topic has already been discussed already. To quote from bankrate: "Myth No. 2: Paying twice a month reduces the compound interest on your mortgage. Wrong. In fact, even though you are paying biweekly, chances are your loan servicing institution is paying your loan monthly. Which means that if you buy into a biweekly plan, you are actually loaning the servicing company half of your mortgage payment -- interest free -- for at least two weeks every month."
EricGo07 said: 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. The magic program can spit out any number it wants, it's math us lesser mortals can't understand. For all we know the software just spits out a random number between 7 and 12 years (since that's how long most of the MMA people claim it will take) Average Joe isn't going to look at their remaining principal on their primary mortgage every month and compare it to what it would be on a regular mortgage. Maybe in a year or two they'll get curious and check what it is, but probably won't do the comparison. At some point are going to be in for a shock when they check and see that they don't appear to be anywhere close to where they think it would be if it worked. By that time the MMA people will be sipping umbrella drinks on a beach somewhere.
Fargo said: I told my friend to take a hike so he let me tinker with the analysis software while I was doing my research and had some surprising results. Post numbers please. I've never seen any actual numbers posted by any pro MMA people, ever, anywhere.
Fargo said: Wow I posted once just asking a question and already being called names. CLASSY. Mortgages are basically all the same the way you pay them back is what makes the difference. So we agree that a Bi-weekly is not a scam. Good. I told my friend to take a hike so he let me tinker with the analysis software while I was doing my research and had some surprising results. The part that is missed by most people and many Mtg Brokers like myself is that by paying every two weeks you are cancelling interest by paying two weeks early every month. The same principle that all these other programs use but increase it by leveraging a number larger than just the mtg payment split in half. This is about leveraging your money (which the wealthy do)that isnt normally being used. Simple concept but hard for most people to implement effectively.hehehehe, yes, more marketing magic. paying bi-weekly pays a mortgage faster because you are paying MORE MONEY OUT OF YOUR WALLET EACH YEAR. bi-weekly = 26 half payments = 13 whole payments. That's 1 extra payment a year versus 12 monthly payments. Bi-weekly servicing companies ARE a scam because they are charging you to hold your extra payment money for a year and earn the interest instead of you. Paying bi-weekly yourself is not a scam. Paying someone to do it for you *IS* a scam. you know this, you just want to convince others so they will buy into it. keyword being buy, ie, buy your product.
dosun said: Fargo said: Wow I posted once just asking a question and already being called names. CLASSY. Mortgages are basically all the same the way you pay them back is what makes the difference. So we agree that a Bi-weekly is not a scam. Good. I told my friend to take a hike so he let me tinker with the analysis software while I was doing my research and had some surprising results. The part that is missed by most people and many Mtg Brokers like myself is that by paying every two weeks you are cancelling interest by paying two weeks early every month. The same principle that all these other programs use but increase it by leveraging a number larger than just the mtg payment split in half. This is about leveraging your money (which the wealthy do)that isnt normally being used. Simple concept but hard for most people to implement effectively. You should read this thread before you post. The topic has already been discussed already. To quote from bankrate: "Myth No. 2: Paying twice a month reduces the compound interest on your mortgage. Wrong. In fact, even though you are paying biweekly, chances are your loan servicing institution is paying your loan monthly. Which means that if you buy into a biweekly plan, you are actually loaning the servicing company half of your mortgage payment -- interest free -- for at least two weeks every month."
WRONG. There are institutions that do credit the money immediately which is a "True Bi-weekly" and they do work faster (they do exist). Simply linking and regurgitating off bankrate or prior posts doesn't work as Ive worked for a few large banking/lending institutions in the past and know better. The Bi-weekly is typically works better with an open ended loan not the amoritized ones we use in the U.S. Ive noticed most are trying to calculate amoritization on a dollar store calculator because they like doing things on the cheap. Do you even the formula for calculating a 30 year mtg?
I just uploaded an Excel spreadsheet which allows you to compare up to 4 scenarios of prepayment to find out how much interest you could save and when your loan will be paid off. I compared the results with Bankrate's calculator and they are consistent. If some formulas do not work for you, I had to add the Analysis ToolPak to get additional financial formulas so you have to add that (Tools | Add-ins) to make everything work.
I used the same loan parameters: Loan Amount: 500K Terms: 30 years (loan starting 9/13/2007, ending approximately 9/13/2037) Interest Rate: 6% Monthly Payment: 2997.75
For each scenario, you can enter which months you want to start and end the extra payments and how much extra you will pay each month. To find out when your loan will be paid off, look for the first month where your loan balance becomes negative. To the right of the spreadsheet is the cumulative interest paid for each month. To compare between 2 scenarios, look for when the balance becomes negative for 1 scenario and just subtract it from the corresponding balance of the other scenario.
For comparison, I've also added a rough calculation for how much interest you will pay if you took a HELOC and paid it in equal monthly payments (with interest) for the same period. For 1 time payments, ignore the HELOC interest because it assumes that you got money from your HELOC and paid it off completely the next month. There's also a calculation of how much interest you will earn if you instead invested your extra payments into a savings account.
Comparing the scenarios of paying $12K after Year 1 and making 12 monthly $1K payments, I find the results around month 338 (E348 and F348). 3,244.26 - 1,610.69 = 1,633.57 interest saved
It would be more accurate if you compared the interest paid when the loan is paid off (columns J to M) but if the payoff dates are not far apart between the scenarios, the calculation above gives you a comparable estimate.
So you save $1,633.57 in interest between the scenarios and you ended up paying $659.89 in HELOC interest and missed out on $278.86 in savings interest if you invested $1K/month. (Note that the HELOC interest is slightly smaller than the old calculation of $690 because the assumption is you pay principal + interest to pay it off completely in the same timeframe, 12 months, vs. the old calculation where you pay it off completely in 13 months.
Without the whole put all your salary in your HELOC to reduce the balance, you end up with a net of $694.82.
For those "I'll end up with more money if I just invest it" supporters, you can use the Savings part to find out how much you would have if you invested the extra payments. See scenario 4 where you put in 1K/month for the life of the loan and find out how much interest you earned after 30 years. Just make sure to add total payments + interest to get the total value.
You can put in your own mortgage/HELOC/savings data to compare how much a prepayment will save you in the long run. Compare the results with Bankrate to see if it's close. Only the cells in blue font can be edited. Note that for each scenario, you can only put in consecutive monthly payments. I can update this to accept extra payments at different times (ex. every 3 months) and include your monthly bills in the calculation...but you will have to pay me $3500!
Fargo said: Do you even the formula for calculating a 30 year mtg?that's actually your problem....that people here DO know how to calculate these things. you can onl;y spout marketing and unsupported claims. the math is behind us.
anthonyu said: I just uploaded an Excel spreadsheet which allows you to compare up to 4 scenarios of prepayment to find out how much interest you could save and when your loan will be paid off. Anthony - your spreadsheet only cost $500 (assuming you bought the whole MS Office suite). The MMA software costs $3,500. Clearly it must have a better calculator than yours!
Fargo said: Wow I posted once just asking a question and already being called names. CLASSY. Mortgages are basically all the same the way you pay them back is what makes the difference. So we agree that a Bi-weekly is not a scam. Good. I told my friend to take a hike so he let me tinker with the analysis software while I was doing my research and had some surprising results. The part that is missed by most people and many Mtg Brokers like myself is that by paying every two weeks you are cancelling interest by paying two weeks early every month. The same principle that all these other programs use but increase it by leveraging a number larger than just the mtg payment split in half. This is about leveraging your money (which the wealthy do)that isnt normally being used. Simple concept but hard for most people to implement effectively.As Dosun mentioned, most first mortgages do not apply payments when received in their interest calculation, but on a set date.
However, if they did, the savings are still hardly worth mentioning. Consider a theoretical loan with a 6% apr. We'll start at a 100k loan, paid back $550 a month, or 550*12months/26weeks every two weeks - 253.846
If paid biweekly, the first bi-weekly interest amount is 100k*.06/26 = $230.77, and the principle is now 100k - (253.846 - 230.77) = 99,977 The second biweekly payment interest accrued is 99,977*.06/26 = 230.716. So total interest paid after four weeks as two installments is 461.486. Compared to paying (100k*.06/13 interest of 461.538 if the first payment is after 4 weeks.
kamalktk said: EricGo07 said: 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. The magic program can spit out any number it wants, it's math us lesser mortals can't understand. For all we know the software just spits out a random number between 7 and 12 years (since that's how long most of the MMA people claim it will take)Perhaps, but I doubt the program is fraudulent. Only a scam, in the sense that the $3500 paid for it will never be recouped from the float game, and the spiffy payoff dates a result of sending discretionary funds to the mortgage rather than anything else.
So I repeat to E101, or anyone else with this program: Tell us how much time has been shaved off the mortgage if discretionary income is zero. And no, you cannot have a massive HELOC debt at the end
Or, let's follow Joe. First, if we are starting Joe with a 30 yr mortgage, a HELOC, and the software, we forgot to include the $3,500 which either needs to be added to the HELOC balance or Joe drained savings or something, the $3,500 came from somewhere.
Let's say Joe does not buy the software. Average Joe stumbled on Fat Wallet and decides he wants to tackle paying off his mortgage (despite other FW arguements that he should invest for retirement or whatever). Joe has a $320,000 mortgage at 5.6%, and Joe has $1,000 in discretionary income per month. Also, since E101 didn't account for the $3,500 in the HELOC, let's say it was a bonus or in Joe's savings account, or somewhere else.
So, Joe places a HELOC on his home. The rate does not matter because Joe is not going to use it. It is his emergency fund only since Joe has no savings. In both your example and mine, Joe's $1,000 discretionary income goes towards the mortgage, nothing else. So, Joe takes his $3,500 from savings and chucks it at his mortgage. He also puts all of his $1,000 per month towards the mortgage. When I plug this into Bankrate, using today as the starting point, a $3,500 one time payment this month, and $1,000 in extra payments per month, Joe pays off his loan in November of 2020. So, Joe paid off his mortgage in 13 years and two months. WTG Joe!!
I'm curious, in the UFF software, using the exact parameters, and assigning a reasonable rate to the HELOC, when does Joe pay off his mortgage?
EricGo07 said: Perhaps, but I doubt the program is fraudulent. Only a scam, in the sense that the $3500 paid for it will never be recouped from the float game, and the spiffy payoff dates a result of sending discretionary funds to the mortgage rather than anything else.
So I repeat to E101, or anyone else with this program: Tell us how much time has been shaved off the mortgage if discretionary income is zero. And no, you cannot have a massive HELOC debt at the end Its the way the program is being marketed that makes it less than appealing. It's almost like taking a bottle of Advil, slapping a new label on it and marketing it as the newest pain relieving wonder drug. Will the drug work? Of course, but is it worth the enormous price I'm asking for?
berlinsmommy said: Or, let's follow Joe.Yes, this is also a reasonable way to test the UFF thingy. But this FW way is actually *better* than you let on, because the monthly salary and discretionary income is sitting in a HYS account until utilized, rather than offsetting HELOC debt
Venturion said: anthonyu said: I just uploaded an Excel spreadsheet which allows you to compare up to 4 scenarios of prepayment to find out how much interest you could save and when your loan will be paid off. Anthony - your spreadsheet only cost $500 (assuming you bought the whole MS Office suite). The MMA software costs $3,500. Clearly it must have a better calculator than yours!You can create and share spreadsheets for free on Google Docs:
dosun said: It's almost like taking a bottle of Advil, slapping a new label on it and marketing it as the newest pain relieving wonder drug. Will the drug work? Of course, but is it worth the enormous price I'm asking for?I think more like taking one tablet of advil, dissolving it in a bottle of water, and then proclaiming:
The power of advil, now in EVERY SINGLE DROP !!. All at the same bottle cost as advil! Why pay for air, right ??
um, wouldn't it be like paying $3500 for a piece of paper that you open up everytime you get a headache that says "go buy advil" since they would market it as something that cures a headache, but you still have to go out and the spend money on advil you would have had to spend anyways. If it were a bottle of advil, at least you would have a bottle of advil, which is useful.
Things I learned using different scenarios with the Excel spreadsheet:
1. Compounding interest works for loans the same way it works for savings/investments. This is what I/we have been incorrectly referring to as amortized vs simple interest (thanks to WalStMonky for pointing this out). A better explanation is that the interest saved is for the remaining life of the loan. Thus, if you pay 12K on a 6% loan with 29 years left, you're not saving 12K * 6% = 720. You saved that for the 1st year, you need to compound that savings for 29 years. The compounded table below (truncated to certain years for space purposes) shows that the $720 interest in year 1 compounds to 53,020.65 in year 29. That explains Bankrate's interest saved calculation of 52,636.81 for 28 years 11 months (because 12K was paid in Week 13).
2. Due to #1 above, you can considerably cut down loans by making extra payments, especially earlier in the loan. We at FWF already know this and playing with the spreadsheet confirms it. This is the same calculation that E101's MMA software uses when he boasts that he will save hundreds of thousands in interest by making extra payments. The MMA software does not use a magic or bogus formula. I'm sure if E101 plugs the same loan parameters and extra payments without including the salary/bills component, we'll get the same results.
3. Comparing the different scenarios, you will come up ahead by using a HELOC to make a big one-time payment than by making extra monthly payments. This is, of course, assuming that you have the disposable income to pay off your HELOC in the same monthly payments. The short explanation here is explained in #1 above, where interest saved is compounded for the life of the loan (29 years) whereas you pay HELOC interest only for 12 months. So having a 10% or 20% HELOC doesn't matter as much compared to the compounding factor of interest saved. Of course, the compounding effect will be smaller/negligible if you're already in year 25 of your loan.
4. I will not pay $3500 for something I learned free while playing with a spreadsheet.
If you have a question or are still arguing with hypothetical scenarios, just use the spreadsheet and find out for sure.
EricGo07 said: dosun said: It's almost like taking a bottle of Advil, slapping a new label on it and marketing it as the newest pain relieving wonder drug. Will the drug work? Of course, but is it worth the enormous price I'm asking for?I think more like taking one tablet of advil, dissolving it in a bottle of water, and then proclaiming:
The power of advil, now in EVERY SINGLE DROP !!. All at the same bottle cost as advil! Why pay for air, right ?? Homeopathologists everywhere approve.
SUCKISSTAPLES said: Visualbang, im going to explain it to you, so please read this long post....
visualbang said: ICurrent Mortgage balance: 138,000 at 5.75% for 28 more years Current monthly payment is $1115 for which we then pay $100 extra towards principal. We take home around 5,000 a month from salary before bills.
With this program, by depositing money into our HELOC and paying bills at the correct time of the month, and by paying $100 extra we should have our house paid off in 12.5 years. ($500 a month would allow us to pay it off in 8.8 years) For the first scenario I would be saving $85,000 in interest over the 12 years.
FIRST let me point out what I see as an obvious error with what you posted above...you say your payment is $1115 per month and you add $100, so you pay $1215 each month...but guess what? there is NO WAY a 30 year 5.75% fixed rate loan for about $140k is $1115 per month! Its more like $850-900/month, and you can use various mortgage calculators on the net to prove it.
NOW The reason your payment is $1115 is very likely because your taxes and insurance are included with your mortgage payment. And What I bet this SCAM "FRIEND" is doing is saying put $1215 amount towards the mortgage (which is really making a $350-400/month additional principal payment), and IGNORING your tax and insurance impounds.
Also, I bet he is assuming you keep a fairly large amount of savings in the bank, which would be kept in this account instead, reducing average daily balance.Kudos to SiS, for nailing these scammers to the wall.
If our hapless OP takes $7500 of his own money and splits it into $3500 for the UFF stuff, and sends $4000 to his mortgage, he finishes the mortgage in exactly 8.8 years. Whereas if he applies his $7500 directly to the mortgage and tells UFF to take a hike thereby saving himself the $3500, he is done in 8.5 years.
Noob here. I think I figured out the hook that UFF uses to snare the unwitting.
According to the bankrate mortgage calc, if you take out a loan for $100,000 @ 6% on a 30y term, you will have to pay $599.55 every month for 30 years. ** hook ** Part1) Now if you put an extra $5K (from the HELOC, let's say) on Dec of next year, the loan will be paid off on Apr 15, 2034 instead of Sept 15, 2037. Now you just shaved off 41 months from the loan meaning that (41*599.55) you saved $24,581.55
** hook ** Part2) The $5,000 from the HELOC. If you were to pay it off in 1 year at 10% (I'm just using the same mortgage calculator) it would be $439.58 per month. Over all it would cost $5,274.96 to pay off the loan.
24,581.55 - $5,274.96 = $19,306.59
Wow! That's almost $20K in savings. Now don't you think that a $3500 (super duper mega lightning intelligent) spreadsheet is worth that?
Get on the ball guy/gals this the what the finance companies don't want you to know. So just keep this awesome information between the FWF members.
Quick Question: Do people really fall for this? In this day and age?
You are on the right track, in that the scam tries to hide the benefit of mortgage prepayments as if they resulted from pissing around with the salary float.
Read SiS's post that I quoted above yours.
If you are doing this yourself, forget about the HELOC, and just pay the additional $5000 to your mortgage directly through the year. Using a HELOC as you outlined just means you will pay HELOC interest > mortgage interest saved until the HELOC is paid off.
E101, I'll try to explain the $3500 in terms you will agree with. If you have a $100,000 30-year mortgage at 6.00% interest rate, and in the first month of that mortgage you pre-pay $3500 to principal, it will save you $15877.24. In other words, that $3500 you spent on the software instead of paying down your house is costing you almost $16,000 in interest over the normal life of the loan. You can do the math yourself at http://www.jeacle.ie/mortgage/.
[Sarcasm]You dont get it Snyder81. The software tells me exactly when to make payments and saves me 200k in interest. $3,500 is a small price to pay for that. [/Sarcasm]
I've been reading through this forum and seeing a bunch of ridiculous statements from the apparent "now it alls" side, regarding how the MMA is a scam. Well, I've seen the presentation, actually seen/used the software that the client would/does use, consulted my mortgage broker and accountant (CPA)and all have no problem with it. In fact, they think it's great. Now what you nay sayers say is fine to a degree. You don't want to use the MMA software, don't...and for God's sake make sure you tell all your friends not to either! It's ok to be skeptical...but don't be stupid. Oh, that's right, I apologize, you aren't skeptical...you are stupid. None of you appears to have actually seen the software (please correct me if I'm wrong)and all the functions it provides the customer. I'm sorry, but I am familiar with similar "free" software, spreed sheets etc or probably most of the other stuff listed on this forum regarding "do it yourself, it's really easy!" BS. Well, you get what you pay for. I could buy a used car for $3500, it has wheels, radio, brakes, AC/heat just like the $20,000.00 new car. Are you gonna rip me for buying the $20,000.00 car? They both work, but the more expensive one has more "make my life easier" functions than the old used car....kinda like using a pencil and paper (or as you genius's "claim" free spreadsheets on-line!) or using the MMA software. I'll take the MMA. Why don't you start marketing your "super cheap" fix and report back on how that turns out.
confuseu said: I've been reading through this forum and seeing a bunch of ridiculous statements from the apparent "now it alls" side, regarding how the MMA is a scam. Well, I've seen the presentation, actually seen/used the software that the client would/does use, consulted my mortgage broker and accountant (CPA)and all have no problem with it. In fact, they think it's great. Now what you nay sayers say is fine to a degree. You don't want to use the MMA software, don't...and for God's sake make sure you tell all your friends not to either! It's ok to be skeptical...but don't be stupid. Oh, that's right, I apologize, you aren't skeptical...you are stupid. None of you appears to have actually seen the software (please correct me if I'm wrong)and all the functions it provides the customer. I'm sorry, but I am familiar with similar "free" software, spreed sheets etc or probably most of the other stuff listed on this forum regarding "do it yourself, it's really easy!" BS. Well, you get what you pay for. I could buy a used car for $3500, it has wheels, radio, brakes, AC/heat just like the $20,000.00 new car. Are you gonna rip me for buying the $20,000.00 car? They both work, but the more expensive one has more "make my life easier" functions than the old used car....kinda like using a pencil and paper (or as you genius's "claim" free spreadsheets on-line!) or using the MMA software. I'll take the MMA. Why don't you start marketing your "super cheap" fix and report back on how that turns out.
Quoted for preservation. Oh lordy, here we go again. Nice grammar and spelling by the way.
confuseu said: <snip> I could buy a used car for $3500, it has wheels, radio, brakes, AC/heat just like the $20,000.00 new car. Are you gonna rip me for buying the $20,000.00 car? <snip>
You obviously have not read much else in this forum.
confuseu said: "make my life easier" ...I'll take the MMA.
i can give a better MMA for $5000. Will make your life much more easier (no software to install).. it will be just a browser link clicking on which will show you ALL your payments at click of a buttons in easy to read grid like format ? interested ? I guarantee that you will save money by just restructuring your payments. don't listen to these geek 'degree' idiots talking math and calculations.
If I had $3500 in cash, I would not pay down my mortgage as suggested, I would use the HELOC to pay for the MMA (did this already). Plus, I didn't have the $3500 to begin with, but have plenty of equity. I'm not a troll (whatever that is). This is actually making me laugh, you guys getting so uptight over a financing tool. WOW, what lives you must have! You don't seem to overly worried about the scam that is the mortgage industry and to a much larger reality...the banking industry. Don't even talk scam until you include them. I'm comfortable in my decisions (and my spelling), and the rest of you can continue to cry and whine about the MMA and how bad it is all you want. So go stick that in your pipes and smoke it.
confuseu said: I've been reading through this forum and seeing a bunch of ridiculous statements from the apparent "now it alls" side, regarding how the MMA is a scam. Well, I've seen the presentation, actually seen/used the software that the client would/does use, consulted my mortgage broker and accountant (CPA)and all have no problem with it. In fact, they think it's great.
Your broker and CPA are probably laughing at you while sharing a few drinks and figuring out new ways to part you from your money.
Just kidding. I don't know you and I would be a fool to assume that you're one.
Let's do this. Let me, or anyone else in this forum that thinks it's a scam, try out the software for a few months. How about that? If the SW works like you say it does, then I (or whomever gets the trial SW) will give you $2K to apply toward your HELOC AND I'll send off a check to UFF for the full amount.
Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.
Members of our community may attach files to a post in accordance with the User Agreement. FatWallet is not responsible for the content, accuracy, completeness or validity of any information contained in any attached file. Files have *not* been scanned for viruses. Be especially wary of Excel files which may contain malicious content.
