There is no magic bullet. You cannot borrow money and pay interest on two loans and come out ahead. The best way to pay down your mortgage is over time.

The spreadsheet link below lets you see how payments to principal shorten the term. The spreadsheet is free.

http://www.webreader.com/download/lending/loan.XLS

If you do purchase mortgage accelerator software, beware.

The purpose of this thread is to provide the spreadsheet for free so people can make payments to principal when they can and see how they are doing against their goal.

There is a reason the expression rob peter to pay paul exists and it is not because it is a good idea.

Good luck

Why all the negative votes? I would think people would love this for free.

good simple sheet. thanks!

Darkhorse - I agree with you and gave you green. This is the right forum for your message (although the UFF threads also make sense). The only thing I would point out (as you may be aware) is that a HELOC can have advantages in certain market environments (like now) when its at a lower rate than some people's first mortgage. For example, in the HELOC mega-thread, someone just got a 4.99% no-closing cost HELOC (at Penfed, I believe). So long as your first is above 4.99%, you can gain some advantage. However, as you have said, you don't need MMA software to realize the benefits.

Thanks for your vigilance and in the right threads.

cme4oil said:Most folks here don't think paying extra principal is a good idea... However, this is still a decent post. Some of the people here would give RED to their grandmother just for fun.Point is, its not always about us. Some people do, in fact, want to discharge their mortgage debt as soon as they can.

They should have an alternative to paying $3500 to overhyped, deceptively sold, U1st scamware. This is not a bad start, but more is required (although not much)
That was what the other thread was trying to do

ellory said:cme4oil said:Most folks here don't think paying extra principal is a good idea... However, this is still a decent post. Some of the people here would give RED to their grandmother just for fun.Point is, its not always about us. Some people do, in fact, want to discharge their mortgage debt as soon as they can.

They should have an alternative to paying $3500 to overhyped, deceptively sold, U1st scamware. This is not a bad start, but more is required (although not much)
That was what the other thread was trying to do
The bad part is that it likely won't sell very well. Then the programmers get shafted. It's probably better just to do it as an open source project and use ads and referral links off the main website to generate revenue that is split by some pre-made agreement. Free software almost advertises itself if it is of value.

I don't want to put down anyone though -- good luck with whatever you end up doing.

ArmchairQB said:I am not up to speed with all of this so forgive me if I am off base on this ( I tried reading some of the other thread but it sounded like a pissing match).

Is this the same as what is known as the "Australian mortgage"? Where your checking account $$ is always paying down your mortgage for short periods of time? Somebody was telling me that WellsFargo might have something like that.For those companies that reference Australia as the source for their "brainstorm" - see the QuickSummary here. The government in Australia shut down scamsters for deceptive and false advertising

There are some situations (e.g where your HELOC rate is dramatically lower than than your mortgage rate) where an offset mortgage can make sense. Especially if you do it yourself at no incremental cost. (Of course it probably makes even more sense to refinance) The savings are not large. The problem is that scamsters (a) portray the benefits of prepayments as resulting from the offset account and (b) they charge large fees (e.g. $3500) that swamp any savings.

As a result, run away from these overhyped "MLM" schemes. DIY wins. See the thread I linked to for more information. Let's keep this one for the purpose OP intended

ellory said:ArmchairQB said:I am not up to speed with all of this so forgive me if I am off base on this ( I tried reading some of the other thread but it sounded like a pissing match).

Is this the same as what is known as the "Australian mortgage"? Where your checking account $$ is always paying down your mortgage for short periods of time? Somebody was telling me that WellsFargo might have something like that.For those companies that reference Australia as the source for their "brainstorm" - see the QuickSummary here. The government in Australia shut down scamsters for deceptive and false advertising

There are some situations (e.g where your HELOC rate is dramatically lower than than your mortgage rate) where an offset mortgage can make sense. Especially if you do it yourself at no incremental cost. The savings are not large. The problem is that scamsters (a) portray the benefits of prepayments as resulting from the offset account and (b) they charge large fees (e.g. $3500) that swamp any savings.

As a result, run away from these overhyped "MLM" schemes. DIY wins. See the thread I linked to for more information. Let's keep this one for the purpose OP intended

Thank you for the links and info. I had a friend that was talking about doing this, I thought he had mentioned WellsFargo as the source. I will pass this info on to him.

FW rules!

Hi all,

I ran a bunch of what if's, it looks like a 5 dollar balance on a 1% HELOC per month still loses money (still takes money away from paying down the mortgage).

Have seen a lot of excellent posts and reference to another thread that goes into some detail on how MM whatever is a rip off.

I just wanted to say that one person wanted me to post my spreadsheet but I stopped working on it once I found the one I referenced in the title.

The title spreadsheet is just a paydown sheet (no heloc or magic scheme). It is better than a calculator because it has an entry for putting in a principal payment for each month. You can skip december for christmas and still track your progress (see column k).

You can see all the formulas and check them also.

In the spreadsheets I ran today, I used this guys formulas (they are simpler than mine).

I could not find a combination of heloc interest rate (went down to 1%), average monthly balance (went down to $5) or minimum amount borrowed up front (only borrowed $505) that doesn't lose money.

You could minimize the loss but it never beats just putting the money directly on the mortgage.

I could see a commercial version being linked to a savings account where you set a threshold and put the excess against the mortgage, but not anything with a second loan involved.

I still would like to see a bank put out a loan where payment to principal can be used to shorten the term or be used to reduce the monthly payment.

DRKHRSE

drkhrse said:To Ellory:....


DRKHRSE
I am not quoting you to give you the opportunity to take down what you posted. I hope you don't talk to people in person the way you sound when you post to anonymous people on the internet. You can get a more productive discussion by focusing on facts, rather than insults. Nor, in fact, was I trying to tear down your efforts, but I won't go there.

Note, please, that your current spreadsheet does not account for the timing of cash flow. (i.e there is a logic error, not a calculation error) And note that even a respected source such as Motley Fool provides an offset calculator

But, to see the way this plays out, and to build an extreme example

1) Your mortgage is due on the 1st of the month
2) You are paid on the second day of the month
3) You spend all of your income every month (i.e. no savings, no "discretionary income")
4) In order to pay your mortgage, you set aside (on the 2nd) the money to pay your mortgage next month (on the 1st)

What you could do, with the offset approach, is to borrow out of your HELOC the next month's payment on the first of the month. Savings a month's interest on your mortgage. And you pay off your HELOC on the 2nd when you are paid (costing you a day's interest). 1 days interest on the HELOC saves 1 months interest on the mortgage, because most HELOCs apply payments daily and most mortgages apply payments monthly. (Else you could pay the mortgage if the payment was applied immediately). I'll leave the spreadsheet calculations to you. Note also, this approach can have a positive financial benefit even when the HELOC interest rate is higher than the mortgage interest rate - if the amount is large enough and the spread in days between the accelerated payment and income is small.

A perfectly valid approach.

Now let me be perfectly clear
1. The savings are small.
2. This is an unrealistic example designed to maximize the savings by timing of cash flow in this artificial example
3. I am not a supporter of any approach that costs someone significant money buy software to do this. The cost of the software (e.g. UFF) eliminates the savings and causes substantial out of pocket losses that are never recovered
4. I am not a supporter of UFF that deceives people into thinking savings that come from prepayment are really due to offset, as the prepayment of principle dominates

drkhrse, your goal is noble. But facts are facts. (And UFF is scamware). And if you're going to debunk the scam MLM sellers of offset accounts

1. Get your facts straight
2. Don't chase away people who hate the MLM's that take advantage of people who are down or not sophisticated
3. Read the Offset morgage thread