I have been comparing the different Software programs using a HELOC 2nd and a Software designed to help you accelerate your mortgage and debt pay off period.The concept originated down in Australia over a decode ago. It uses a Heloc as a checking account. You put your income into the heloc and pay your expenses out of it each month to pay your bills and meet your needs, the rest of the money sitting in your account reduces the interest charged on the heloc. I have to say after looking at about 8 of them I feel there is one that stands above the rest. It is the APlus Accelerator program, IMO. It combines the benefits of a Heloc a, and a complete Cash Management Budgeting tool that truly tells you where your money is going and how to best use your available funds to pay your bills and in what order you should pay down your debt. The real secret here is the budgeting device. Most people have no idea where all the money they spend each month goes. With this software you will no where every penny goes and the Immediate effect it has on you and your debts. It does take some work on your part for it to succeed. You have to enter your income and expenses, All of them and if you do it 1-2 times per week it will take you about 15 minutes to do this. At the instant you input any data your numbers change to reflect any new information.
I am a big fan of the Home Ownership Accelerator loan that allows you to use a HELOC as a 1st mortgage and also use it as your checking account. It is simple, easy to use and if you are a disciplined person who makes more than you spend monthly is a great way to accelerate the pay off of your Home. I prefer this program over the software programs because it is so much more seamless and simple to set up.
The problem with the HOA loan is it is only available for A paper borrowers who have at least 15% equity in their property. You can not get the loan for rental property or if you are less than a A paper client. This is where the software and cash management program come into play. This program works for all debt. You still have to make more than you spend and be able to get access to 1-2 months take home pay in a HELOC or other line of credit. Now that you have an extra 1-2 months take home pay available the software will help you and teach you how to Accelerate your debts and in what order.
Imagine if most Homeowners could be totally debt free in as little as 8-12 years without CHANGING THEIR SPENDING HABITS A SINGLE PENNY.
I hope more lending professionals learn about these programs and go out and TEACH them to HomeOwners. Than we can make a difference.
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Good post Tim,
My challenge with the software based product is that #1, it's an MLM designed to produce downlines by selling the software, and #2 - based on my experience only, i do not believe that most people will actually use the software to change thier spending habits. I'm a bit cynical on that subject simply because i know you can not change somebody's perceptions and beliefs....they need to change them by thier own desire and will. It's the whole "you can lead a horse to water" thing. This is the same concept of using a neg am (equity increases more than deferred principle) and interest only products, paying off all your credit card debt, and using the money you save to apply toward the principle payment on your home and own it sooner.....never saw anyone actually stick to that plan!
That being said, i do like the concept of the HOA. Simple interest HELOC, tied to LIBOR right?, this is a great loan for people that are already practicing similar money management techniques.
I would like your idea of using the software to help accelerate the pay down of the HELOC, but at a cost of almost $4k....i simply don't think most people would have the dicipline to do it.
You've got a great innovative approach though.....i like it!