Tony,

I have been a mortgage and financial professional for over 18 years.  I will never claim to know everything and when my mentor told me about the MMA program, I was very skeptical at first.  Then, I spent some time researching the program, obtaining the proper information from the proper sources, and talking to people currently working with and using the program (not critics who "think" they know, but haven't used the system). 

What I will tell you is this: There is absolutely no question whether the Money Merge Account (MMA) works.  It does.  I am using it to pay off my own home.  I owe approximately $265,000 on my first mortgage and have an equity line with a balance of $90,000. 

Using the MMA, both loans will be paid off in 8.3 years, saving over $400,000 in interest charges (not a bad return for a $3500 investment).  The software has helped my wife and I simplify our finances, and it takes about 5-8 minutes per month to update.

Once our loans are paid off, we'll then utilize the equity in our home and the rules of our equity line to create virtually interest free money to invest on a yearly basis.  Here's how:

After we've spent 8 years using the MMA software as the brains and our equity line as our "interest cancellation" vehicle, we will "borrow" $100,000 from our equity line and place it in an investment vehicle.  Our income will continue to pay down the equity line at a rapid pace (it will be our only debt).  Say it takes us one year to pay the equity line back down to zero.  The interest we paid over the year will be quite nominal, and the equity line balance will be back to zero.  We'll "borrow" another $100,000 for investments in year 2 and continue the process, again and again and again.

In essence, we will be using virtually interest free "borrowed" (and tax deductible) money to invest every year, turning our home into a "money machine".  Investing $100,000 per year for 10 years at 10% interest will yield us over $2,000,000, with another $100,000 being invested every year.

Within 18 years, instead of being less than half way through paying off my mortgage, we will own our home free and clear and have created over $2M, all from one $3500 investment.

Once you really understand the MMA, you realize that not only are you obtaining a tool that will help you save hundreds of thousands of dollars in interest, you start thinking differently about money and interest.  You start thinking like the "bank" rather than a borrower.  Learn different information to create different results.

As J. Paul Getty so aptly stated, "The reason 95% of the wealth in this country is controlled by only 5% of the people is because 95% of the people are stupid." 

Start using tools and obtaining information that will lead you toward "5%" thinking.  The MMA program definitely provides that.  Let the critics save their $3500 and grovel in mediocrity with the rest of the 95% world.

Oh, and by building a team of other MMA agents to help their clients become debt free, you can develop passive override income (another concept used by people in the 5% world).  Clients become debt free and you make money by helping others - what a concept!  If you want more information, e-mail me at mikesmela@physicianlender.com or call me direct at 248-705-4456.  There are also webinars from 2:00-3:00 eastern time every Thursday for financial professionals who want more information on the MMA program.  The log in information changes each week, so I'll need to e-mail you the information as I receive.

Best of luck to you.

Mike Smela / Founder, PhysicianLender  

I recently came across this program, had the same reaction as a lot of you, and went out to do some research as well.  It seems to me that the people who are most likely to be able to take advantage of this program are the people who either have a lot of money to deposit (and credit against the mortgage balance) or who run a lot of cash flow through their account each month.  However, these are the same two groups of people who are most likely to have other investment vehicles available to them which will earn more than the current mortgage rate less tax deduction..

I wrote a more detailed post about it here: www.ButterHomes.com/Blog/index.php/mortgage-accelerator-paying-off-early/

Interesting topic, though.  I'll keep it in my toolbox; not sure how often I'll use it.

-Chris

It has been great to read all of the opinions about mortgage accelerator programs.  I am a sales rep for the company that first developed this system in the United States and I thought it was a scam for three months after I was first introduced to it.  I researched it for a while and eventually decided to sell the program with the intention to help others pay off their homes, get out of debt, and set up a retirement.

After speaking to many accountants, the owners of two local banks, and other people with the goal to get out of debt as fast as possible, I am confident that this program can definitely help people.  The only risk involved with this system that I have seen is that if people lack the discipline to not spend money when it is made available to them, then this won't work for them.  Even if they spend every penny of monthly discretionary income, they can still save thousands in interest just from following the program. 

I have several customers who have been on the program for less than a year and have been able to knock off over $100 thousand dollars on mortgage interest they would have paid.  The effect of the system depends on the individuals own situation, but it can work for anyone who makes more money than they spend.  You could probably figure out how to do it on your own, but in my opinion, it wouldn't be worth the time and effort when the system is already available.  Making small errors in transferring debt can cost thousands.

The company I work for make available the system and personal assistance when the customer is making a decision and needs help.  We also help with retirement and other financial planning.  I agree that the system is not for everyone, but it does work.

Visit www.sydneyfinancialgroup.com for more info.

Bob & Terry,

On rate exposure

On thing to realize about a HElOC is that "payments" are calculated based on the amount that is drawn not the total line amount....So yes if you compeletely pay-off your current fixed in big lump payment and have the total balance on the HELOC this would be bad...But this is NOT what the MMA method advocates....

The MMA advocates a smaller Second position HELOC cycling your income throug it to keep the toatal drawn amount as low as possible and making several principle pay-downs on your first through out the month.  The MMA software will know how much your current income is, how much your discretionary income is, how much your monthly expenses are (to include monthly withdrawls to seperate investments) and will calculate when to make the priciple pay downs on the first based on these figures....Depending on all this information some people are able to pay of their first mortgage in as little as 5 years even if they have close to 30 years left on the amortization...Som people it will take a little longer...For some people it will only shave off a few years if they absolutely do not change their spending habits all...But even a few years is better than nothing.

NO one needs the MMA to be able to do this on their own...The MMA method and software just provided an effctive and more efficient way to do it.

And Bob Yes that was me that deleted your posts alon with another individuals after your posts started to get more attacking and directly "insulting" towards my character personally...Wheteher you felt your comments were valid or not, My Blog is not a place to make them...You want to make the comments that insult or attack and not have them deleted, you make them to me personally via an e-mail...You did have some good points in part of your posts that I deleted but because of some of the other parts that became attacking and insulting I had NO choice but to delete them...Sorry...IF you want to have a civil conversation at my blog minus the insults, attacks, or anything else that is not constructive within the context of the post topic I will gladly conversate and NOT delete your posts....But I do not tolerate public insults or attacks at MY BLOG for any reason.

I think a lot of the skepticism, and argueing that insues because of the MMA is because of a fundmental misunderstanding how these programs really work and then the jumping to wrong conclusions...Personally I try to make sure I get all the facts about something before I ever even attempt to jump to any conclusions about anything.....And I certainly will not "personally" attack someones character based on something that I may not really understand to begin with...

Keith

Geeezzzz, you guys!  I wanted opinions about the MMA program, not a pissing match between guys with a diffrence of opinions.  This is really not the place for that.  I'm tempted to delete these argumentative posts, but I like the the different perspectives from all who contribute.  Just for future reference:  "Arguing on the interenet is like winning a gold medal in the Special Olympics...at the end of the day, you're still retarded."  I'm not sure where that quote came from and certainly don't want to offend anyone, but I felt that it needed to be repeated here.  Let's keep personal attacks off here and just post any facts or opinions that you may have.  Thanks!

T  :-)

I still don't get how it works.

• I get that I deposit all of my income into a heloc
• I get that I pay bills out of the heloc.
• I get that my discretionary income is put towards the mortgage.
• I get that I'm supposed to save years and thousands of dollars
• I do not get how I can put all of my income towards my mortgage and still have enough to pay my bills.

Someone please help.

Helpful numbers

Monthly mortgage-1600

Monthly -income-5000

Monthly bills-2500

Chris,
What you have to do is think about is spending in the negative, but with a positive cash flow, which is tough for most people to comprehend.  Lets say you have a $100,000 mortgage.  And you get a $20,000 HELOC....immediately take $5K out of the HELOC and deposit to your 1st mortage decreasing the principal balance.  The benefit is ALL future mortgage payments (over the life of the loan) have a larger percentage going towards principal and not to interest.
Now....You pay your mortgage and other bills using the HELOC, going to a total of -$9100.  You deposit your $5K.  Your HELOC then becomes a -$4100.  You only pay interest on the HELOC on the $4100 balance.  But you don't have to make a payment because the $5K you deposited counts as a payment.  The interest only (on the $4,100) that you accrued is added to the HELOC.  (I'm assuming the interest accrued is less than the $900 cashflow you had).
Work it backwards till you get closer to zero on the HELOC.  Before you hit zero (however many months that takes) you pull another $5K out and pay down the principal on the 1st again.  Then repeat.  If you punch it all into an amortization chart....it does sorta make sense because more of each subsequent payment will go towards principal instead of just interest.  The first get paid down faster because of the decreased interest payments.  You still spend the same amount of money you always spent, nothing more and nothing less.  Think in the negative spending pattern.  I know, its an opposite way of thinking, but the math does work in some situations....Get it now? 

Go to Jim warr radio archives http://www.worldtalkradio.com/archives.asp?sid=433 he has a similiar program. He also has an interesting take on mortgage industry in general.

Hi, Nice details about Mortgage Accelerator programs.Really first of all we have to know the math and the details about the payment we have to made.Then it is more useful and interesting for us. I have some interesting info on this topic about

</a href="http://www.mortgageacceleratorblog.com/">mortgage accelerator</a>

Why not just use a credit card, and a savings account? 

Pay all of your monthly bills and discretionary spending with the credit card.  Deposit all of your checks into your savings account.  When the credit card is due, pull the money out of the savings account and pay the card off in full.  Whatever you have left add to your monthly mortgage payment.

For example, you owe $100,000 on your mortgage with a monthly payment of $500.  Let's say your take home pay is $3500 a month and you have about $2000 in bills (including your mortgage payment) every month.  If those $2000 in bills are paid with a credit card (with the exception of the mortage) and you deposited your take home pay in a savings account, you are effectively achieving the same concept without using a HELOC.  Just take all of the money out of the savings account at the end of the month, pay off the credit card balance and use the rest as an extra monthly principal payment on your mortgage.

Making the monthly extra payment will reduce your balance quicker than making a larger payment every few months.  You will pay less overtime.  You will not pay any interest on a HELOC loan.  You will make interest on your savings account.  You can get rewards if you use a reward credit card.  Plus you don't have to spend upwards of $3500 on software. 

Johnnie 

Do you know what the difference is between my way and the accelerator way? 

Using your example, over the life of a $200,000 mortgage at 5% interest adding $3750 in principal results in a best possible scenerio of little over a $1000 savings in favor of the accelerator over the life of the loan.   Factoring the interest of a savings account at 5% will give earn you pretax earnings of $882.   Rebates form a credit card will give you another $460.  Those two alone cover the difference without factoring in the HELOC interest rate or any costs that may be associated with the program.

If you are able to take the initial payment that most people make for the software and put it on the mortage, the best possible result is lowered to roughly $600 in favor of the accelerator program.

This MMA program is not for 95% of undisciplined,fat americans. If you were disciplined , you would have a savings account in the first place, and have extra money left over to pay down principle.

Since you are not , you want to go create a line of credit, and not have your checking ever hit zero, to give you a slap over your fat face that its time to spend LESS?

instead it will keep drawing out of the line of credit, as you merrily go to walmart for more sugar pops and a 50 inch plasma tv to go with your $100 a month cable bill that runs ads on tv to in turn buy more crap. 

so if you have $3500, in the 1st place , then make a payment on principle. if not , then theres my point ,.. you are borrowing $3500 from a line of credit , because it "makes your life easier",and burrowing deeper in debt.

Americans need to lower their level of spending and scale down lifestyles they cant afford. period.

Thats why the rich get richer, because they know these mlm marketing gimmicks always work.

Good luck, Lemmings 

I love the idea..hate the fact that the program cost so much.  I have found a program on the internet that cost...$99.00 and one that cost $1,295.00 They both claim to do the math.  Does anyone have experience with these

 http://www.maxmyequity.com/index.php

http://www.mortgageacceleratorplus.com/product.php

I was first approached by a friend who's judgment I trust immensely to find the flaw in this MMA product, I was extremely skeptical about anything that had MLM attached to it. Let's face it the only successful MLM's I could think of were Amway and Herbalife. I found CMG and Macquarie Mortgage. Royal Bank of Scotland offers a similar product but only in Europe. The CMG product has all the bells and whistles, it's a first Mortgage Heloc that goes to 90% LTV and it's not tied to Prime it's tied to Libor. It has a GMAC credit card and bill pay so you don't have to import data from your existing bill pay. As many of you have stated these products are not for everyone, but were talking about Major players who have Mortgage accelerator products. If these were scams I'm sure one of the largest Banks in Australia would have been sued by now.

My personal opinion is that the CMG product is great for those who are self employed and need access to their money from time to time without the worry they have with the MMA that prepays the first mortgage and builds equity but you lose access to your money unless you have a large credit line. The CMG requires you get a new loan and you might not qualify with the tightening credit standards now in effect. You need a 680 credit score or better if you can't prove your income. The downside of the program is their software is not intuitive at all. They only go to 80% Ltv on a first and will provide you a 10% second Mortgage but the software doesn't help you payoff the Heloc they provided you. A real problem for me. Why do you have the product if it will only help you 80% of the time? Also you can't do any of the amortization schedules you can with the MMA software, it's really a good product for some but not for most. Lastly the cost of refinancing is only good if your in a high rate now or want to payoff a lot of credit card dept. The CMG people say the costs pay for themselves in a short time, but why refinance when you can take that savings of $10k to refinance and use the MMA software. If you applied that same 10K of savings by not refinancing you will payoff your loan much sooner than with CMG.

It is also a hard sell if you have a 5% or 6% mortgage now to justify the costs vs the MMA 

The Macquarie product is similar to the CMG product, except they don't have the credit card, they do however go to 100% Ltv which CMG does not. Again if your self employed and want one loan with access to your line when you need money these loans might suit you better.

The MMA product is a superior product because of the tools it allows you to utilize. It's simply best because it's intuitive and tells you how much to pay and when to pay it on both mortgages, it has detailed amortization schedules and simple analysis reports. It is also easier for someone to get a line of credit and less expensive from their own bank than refinancing and paying all those costs.  think it would be less controversial if they put up a website for the public to enter their information in and run a general analysis. These loans are not magic bullets they are just math. This product is not for everyone, the down side is access to money if you need it with a small line of credit they encourage you to get.  

The market is soft and building equity is one of the few options we have. Paying down your Mortgage vs taking the money and investing the difference is the only way to go. How can you compete with a non taxable instrument if you have lived in the house 2 years (no capital gains) vs a taxable instrument? Plus your other investments if leverages are a lot riskier.

And I laugh at all of you who say you can do it yourself if you have discipline. If that were true we wouldn't have personal trainers, coaches or shrinks. We have these people around to help us stay disciplined.    

 MLM's are only successful if it's a product the masses can use. Most people can use this now because their not selling their homes anytime soon and their homes aren't appreciating. Personally I use all three products, if the Royal Bank of Scotland has had it for years then how can you discredit something the largest players in Europe promote?

The one BIG catch in the mortgage accelerator program is the difference in the interest rate between a regular fixed rate mortgage and the HELOC. Normally there is an average of 1% difference.  The difference in a 500K loan is 416.66 a month or 5K a year. So, you're paying an extra $416.66 a month for having the HELOC and the HELOC is always an adjustable rate loan with a maximum cap from 12 to 25%.

If your monthly salary is 10K and you deposit the full amount in the mortgage accelerator program at the beginning of the month you only save approx $29.16 in interest that month if your HELOC is 7%. Now you're paying an additional $387.50 a month ($416.66-29.16) or $4,650 a year by having the HELOC at 7% vs a fixed rate first mortgage at 6%.

 Even if you're paying down the loan at the end of the month due to excess cash flow, you can do that with a regular fixed rate loan at your option. You are loosing in the example above $387.50 monthly if the HELOC interest doesn't move upward.

The only positive sign that I see in this program is you have access to your equity at any given time. But it's not worth the $4,650 a year for me on a 500K HELOC.

If you have a 100K HELOC mortgage in this program you're loosing $1,162.50 annually. You can play the numbers for your losses. That's if there is NO COST for the Mortgage Accelerator program.

I would appreciate some input from the professionals in this group. I enjoy the feedback and am doing my due diligence right now.

My current interest only 5/1 arm is adjusting in Jan to 7.75% on a 575,000 balance. Home value 1.2 mil. I like the cmg program as it has the all in one feature and the process is automatic every month and I don't have to do the manual transfer, which I see as a real plus. I am considering paying the heafty 4 points to buy down the margin to .75 as I know it is the adjustable Libor and that would bring it down to around 5.75 at this time on my jumbo loan. I understand it has the 5 pt cap and it can go up and down. My current "interest only" is 5.25 so I, like many, have been spoiled for the last 5 years but that was ok as I had two in college at the same time and now that is over. I feel I am a strong candidate as I am 57, look to work 10 more years and would love to have this puppy paid off when I throw in the towel. I am self employed and have 25k per month coming in with a credit score close to 800. I feel I have to refi now anyway so making that decision seems to be made for me. I currently have a 250k heloc of which I have a zero balance.

I believe the concept works.  What about buying down the margin for the life of the loan?  Some have suggested I refi to a conforming loan 416,000 @ 6.% and put the balance on a heloc and pay the $3500 and use uff or sfg.....I'm all ears

Thanks for your input,

Ted

The ufirst software is overly expensive.  There are programs available for $99.00 online that do the same thing.  I recommend getting a new publication by Roccy DeFrancesco, JD called The Home Equity Management Guidebood: How to Achieve Maximum Wealth with Maximum Security".  Cost is $35 from www.thewpi.org (The Wealth Preservation Institute).  He discuses the ins/outs of mortgages, equity harvesting and mortgage accelleration.  He also goes over the math and real life examples.  A good tool for advisors as he is not promoting any specific company, just the information.

Remember, just because a program can't or shouldn't be used by 100% of the population doesn't make it a scam. Bi-weekly, Rounding Up, Apply the bounus, and MMA all take discipline.  Does that mean they don't work?  What are the alternatives - Pay the bank an extra $200,000!?

All these programs work, and are appropriate for the "right client".   After you decide on that, it's a matter of getting a program that works, and getting the right price.  As I said, I find the Ufirst program unbelievably high priced at > $3500.  If I got software through wpi (advisors only) my cap to charge a client is $1000 or be "de-credentialed" for greed.  For the work, I can only justify $500. 

So, the right program for the right client at an appropriate price.  Right? 

Steve

I appreciate the speedy response Tony, thank you and congrats on the HELOC yesterday! But perhaps I am more naive about financing than I thought - if I have a 1st and a 2nd, is it still even possible for me to get a HELOC? Granted, my credit is fine and even with the 2 notes I still have ~100k in equity in the home, but, in light of all of the recent money "fallout", can I really do this?

I look forward to your postings of your progress.

BTW, I do plan to keep the property, even if I want to move, will keep it and rent it out (excellent school district in OC) - my grandmother made me promise to do it, and it doesn't sound too unreasonable of a plan if/when the time to move comes.

I really appreciate the diversity of perspectives, the concept is so engaging, I could not stop reading. I have a question, what if you don't have a strong credit score? What if you have bankruptcy history?  Can you get a ALOC or HELOC? are they different?

The american dream is not having a house, but having a house that you don't have to keep paying for or keep working for.  This concept is so intriguing because it will affect the masses.

 The discipline is key, the generations vary greatly, but some people love a plan, but more love results, the visual monthly planning via web is something most people do not do.

 I am fascinated and looking for a better way, I make the income and have been paying a $1000 extra on my mortgage / month so I can retire at 57 (10 years) and pay off my mortgate, I can't wait to do an analysis.  I think this is fire, it's hot and could burn you if you aren't careful.

Thank you for all the diverse opions.

The "savings" on these types of producs come from two mechanisms:

1.  swapping monthly accrual of interest on your regular mortgage with daily accrual of interest on a HELOC

2.  excess income accumulates to paydown the balance on the HELOC

 99% of the benefit comes from the excess cash flow and 1% of the benefit (or less) comes from swapping daily accrual for  monthly accrual

I've worked through an example using the HELOC concept (i.e taking a HELOC and borrowing 10k to paydown your mortgage) and ran through all the #'s by hand.

You can do this for yourself and a good way to isolate to the two benefits is to do an example where your income exactly equals your outflow.   If you do that then you isolate the "benefit" of the daily accrual and it is MINIMAL.    In the example I did the interest savings for the ENTIRE 4 months was $68 and this assumes a zero interest rate on a checking account.  The other assumptions were that the HELOC rate was 8.25% an the mortgage being paid off was 6.50% (both reasonable assumptions). 

Bottom line - the VAST majority of the benefit comes from merely applying all your excess income each month toward paying down your mortgage.   You can do this yourself without any software and without paying a broker or a bank anything.

The second thing to consider is if you actually SHOULD be applying all your excess income to paying down your mortgage.   Some maybe - All of it - I say NO. 

Anyone who is "pushing" this product either doesn't understand how it works (I mean REALLY understands it - Do the Math for yourself) or just doesn't care.  

 There's no "benefit" worth paying any money for.

Mortgage Acceleration and MMA accounts are 2 different products.  Mortgage Acceleration loans take your 6% 30 yr fixed and tun this into a HELOC at 8-9% interest rate.  I made a spreadsheet to figure out if you are diligent enough to  pay the extra, do it on your own and you will win mostly because of the interest rate differential.

MMA account uses your current mortgage (saving $2000-4000 in refi costs if you thought about the mortgages above), and you utilize a HELOC as a sweep account, similar to how many businesses are run with a checking/ line of credit account.  The software somehow figures out the delicate balance between your HELOC balance, income, expenses, and 1st mortgage principal and interest to find the optimum HELCO balance (looking into this they don't just take $20k and pay your mortgage down), and paying a certain amount of principal to your first at certain times. the math does work, and probably works slightly better than simly adding a bit to each payment.  This also takes intoaccount real time issues each month (health bill, bonus check...) and adjsuts the program accordingly.

The biggest issue I see is that most American aren't diligent.  Most people have a little extra each month, have bills, and can never see the light at the end of the tunnel.  Thi software allows "these" people to have some tool to keep them honest, and eventually when they watch the "your loan will be paid off in x years" move from 10 to 12 because they blew some money, maybe it will finally teach us to save more then spend.

 Now, the software costs $3500, expensive, but in the long run it will most likekly be worth it for "these" people.  Anyone that has $2000 lying around each month should be able to do this on their own, but how many people do you know that has that good of cashflow?

 I could put togther a program, or spreadsheet, telling people how to do this for free, but that is about how much it will be worth in month 3 when they simply toss it to the side.  Just like everything else in life, it is not for everyone.

I think this Mortgage Acceleration program could work.  Just like everyone has been saying its not for everyone.  I too was approach to sell this program. 

My concerns are not about interest rates or cancelling interest.  If you figure out other factors regarding the finance (mortgage) industry, you'll see that this would be hard to do.  Of course I work in the Industry for many years and everyone I talk to wants to payoff their house.   A very high percentage of them never do because they borrower on it via refinance or HELOC.  We have to concider facts that most people will probably refinance within 3-7 yrs.  As a matter of fact according to Freddiemac.com the average life of a loan is 3.8 yrs in California.  The stats are high.  Roughly 95% of Americans do this.  Why?  Because we spend more than we make.  They need to borrower to pay off our credit card debt.  Not only that what is the statistic for first time home buyers staying in there house for more than 10 years.  Very unlikely that they will live there for their entire life. 

Here's an annual average for age of refinanced mortgages from the Freddie Mac data:

1999: 5.0 years
2000: 4.5
2001: 2.4
2002: 3.0
2003: 1.9
2004: 2.2
2005: 2.6
2006: 3.2

Great example, median home in California is (as of Sept. 2007) is between $450,000 to $500,000.  California's median household income (U.S. Census 2006) is $48,201/yr.  Using the interest rate factor of 6.653, the calculation of a $450,000 home w/o taxes and ins is $2,993/month it leaves the family with a little more than $1000 to survive on. 

Also if you are paying on the MMA program, what happens if you lose your job, house burns down, flood, you get ill, etc..etc...Every penny you put in is subject of lost.  The more equity in your house and if you suffer from any of these tragedies list above more likely you'll loose your house to the lender.  How safe if that?  Or what if the market dropped like it has in the last year.  Its not a smart investment when you put all your money in basket and risk loosing it or a portion of it via market value. 
It was hard for me to sell it because I could not see $3,500 for this program.  Doing my research I found other programs that promises the same result for $199.00 to $500.

Just my 2 pennies

just my two pennies

Can you elaborate on your point of what happens if? Lost job, tragedies etc... Why is everything lost?

I've done the numbers and it works.  I'm not saying it don't work.  I'm saying the program cost too much..

Crunch the numbers on investment vs. paying off your home.  I'll suggest to kept a 10 years interest only loan and invest the difference.  If you're going to pay $3,500 and make a huge lumpsum payment on the principal, I say dump it into investment is better.

Dino- 

Lost of jobs due to illness, layoff, injuries, etc.etc.. equal no income.  Someone has to pay the bills.  Some has to pay the HELOC.  Even if you were in positive income when you started this program, you'll be in the negative if these tragedies occurs. 

House gets burnt down.  All your money is stuck in the house and burnt with the house.  Real Estate is not easily liquid.  The question is how much will your Homeowner's insurance going to give you.  Surely not what the house is worth.  What about natural disaster?  (Hurricane, flood, fire, earthquake..)  Many homeowners don't have this protection. 

If I'm teaching someone to paydown on their house knowing that statistically they might refinance 5-7 yrs later to get cash out.  (According to Freddiemac.com 95% of people do this.)  They are eventually giving their money to the banks and then borrowering it back at 6%-8%.  Makes no sense. 

When I ask this question to people selling this product, (1st time homebuyers sell within 12 years), Where are you going to get the money to buy your new home? (Considering that all your money is going to payoff your mortgage, you'll have little or no savings/investments).  The answer I get all the time is,  I'll get an 2nd mortgage or HELOC on my paid off house.  To me it makes no sense to payoff your house so you can borrower it again.  Its like giving your money to the bank and asking to borrower it back at an interest.   

Here's a link to Clark Howard talking about this MMA:  http://www.youtube.com/watch?v=IQKPwT1jXuI&feature=related

I read this blog's consensus as all the mortgage accelerator products available will work and it's up to the homeowner to decide what one best fits their overall financial strategy. Otherwise, do it yourself, which also works. All have advantages and disadvantages depending on the homeowner.

I do disagree with the blogers that harp away that homeowners can do it themselves. I doubt these naysayers are doing it themselves. The simple truth is most homeowners are not. So any program that helps them better manage their finances and pay off their mortgage(s) sooner is a value, if that is their goal.

I also disagree with Laurie that CMG's HOA is the best product. Why would I take my 4.5% 10/1 and refi into a 7.5+ CMG varialbe? For me that would be incredibly stupid. So using a HELOC instead that I keep close to a zero balance is a better product for me. I still have access to my equity when needed, just like the HOA and I save myself $12,000 in closing costs. I already figured it out. But hey, CMG is a great product for others- just not me.

 What I liked about my UFF agent is he did not badmouth any of the other products. He simply said they all work depending on your situation. Do the research and pick one that best suites your financial goals.... or do it yourself. To me, that's someone looking out for MY interests, not just trying to sell me something. So I recommend the MMA to my friends - at least to educate themselves.

What am I missing here?

I keep hearing all the interest that will be saved, etc.  Assume a $200,000 loan at 6% rate of interest.  The fully amortized payment over 30 years is approximately $1200 per month.  Even if the bank is so kind as to eliminate all interest and allow me to simply pay off the mortgage, it would still take almost 14 years to fully pay off the loan if I continue to pay $1200 per month.  $200,000 divided by $1200 is 166.667 monthly payments of $1200.  166.667 months divided by 12 is 13.889 years. 

I have heard this sold on the basis of making no extra payments, no bi-weekly payments, and still be able to pay off the $200,000 loan in five or six years.  I agree if one pays extra through the self-discipline of extra payments to the mortgage. 

Please someone help me out here. 

As an Independent Software Agent for United First Financial, I strongly believe in the product and I market the concept to Mortgage Brokers and Financial Consultants.  First, the concept is not new as it has been used in Australia and the United Kingdom for decades.  Several products are available here in the United States.

Unfortunately, some of the things being said about the United First Financial MMA system are not accurate.  This system can run successfully with very little disposable income.  Yes, the more the better, but it can still work with smaller amounts.  Also, no refinancing of the first mortgage can save time and money.  And it may work with an existing HELOC.

The real beauty of the United First Financial MMA System is that it "merges" the first mortgage (any type of mortgage!) and ALOC and the software serves as a financial dashboard, enabling homeowners to better manage their finances.  The ALOC serves to access the home equity in the event of a short term unemployment or illness--better to have access than not. And it allows the homeowner to make choices.  If you want a vacation, you can take it...draw on the ALOC.  The software will recalculate every "financial move" the homeowner makes and adjust the scheduled payoff.  The "true cost" feature allow the homeowner to determine what that vacation really costs in terms of paying off the mortgage.  They can then decide if the variance from their original plan is worth it. 

Everything takes discipline.  Getting up and going to work takes discipline.  Managing ones finances takes discipline as well.  The United First Financial MMA System can be a valuable tool.   

Also, for some reason Multi-level or network marketing has gotten a bad rap. Quite a few successful companies rely on this model to market their products.  Take United First Financial, you've never seen an ad for them and they have over 20,000 agents contracted.     

Please feel free to visit my site to view a short presentation on how the system works.  And feel free to give me a call with any questions. 

 www.u1stfinancial.net/gaillynnmoore

Gail Lynn Moore

Independent Software Agent

1-888-217-7126

No one has mentioned the IRS tax code on Equity Lines/Loans on interest deductibility. The max interest you are able to deduct  on an equity line/loan is based on a max loan amount of $100,000. Regardless if the equity line is in 1st position, just call IRS. If the interest rate for 1 yr on a the equity line/loan of $100K is 6.5%, the max interest you're able to deduct is $6,500. So if you paid interst on 300K at 6.5% through the course of the year on an equity line/loan, you would be unable to deduct $13,000 of interest expense. If you're in the 30% tax bracket, that's $3,900 of actual cash lost over that period. That additional $3,900 can be used to pay down your loan.

How in the world can you save money when the equity line interest rate is 1/2-1% higher than a regular mortgate? Plus you lose interest deductibility when the loan amount is more than 100K on the equity line.

Their claim to fame is your overall monthly average balance with the use of an equity line and using excess income accumulated to paydown the balance on your HELOC. For an example, if for one month your monthly average for a regular mortgage is 300k at 6%, your interest paid that month is $1500.

If you use their program, with a one month average of 295K at 6.5% on your equity line, your interest paid that month will be $1597.91. Not only are you paying more interest, over a course of the year, the max interest you can claim is $6500. The monthly excess income can be used to pay down any regular mortgage. 

Let see, for that month you paid additional $97.91 in interest expense and over the course of the year you can only deduct $6500 where if you had a regular mortgage at 6% your interest expense would be near $18,000.

If you have good credit and want emergency funds, highly recommend an equity line and keep your 1st mortgage. Sooner the better as home values are declining over the next 3-4 years. 

 I realize they claim this program is not for everyone, but why in the world would you want to pay more interest, month after month. When you take out a loan, you're only buying money and it's easy to see the dollar difference in this program. God help anyone if the interest rates take off on the equity line.

 The program isn't a scam, you'll just pay more to pay down your mortgage. Talk about SMOKE and MIRRORS.

Many homeowners welcome the knowledge and disipline the MMA program (or any MMA-like program, or the 1st HELOC accelerators like the CMG HOA, IndyMac's DynamicOne, etc. ) gives them. Everyone supporting these programs ackowledges they do not work for everyone. But since most homeowners are not now paying their mortgages off as quickly as they could, nor are participating in any substative investment strategy; then mortgage acceleration programs are a plus for them not a minus.

I laugh at the bloggers that bluster that everyone can do it themselves. Maybe in la-la land, but such is not reality, is it.

The naysayers also fail to acknowledge that MMA-like programs that use a HELOC as the mortgage checking account also leverage small amounts of the HELOC to pay down the existing 1st mortgage faster than any homewoner can do alone using just their own money. You are not just transfering one debt to another. You are borrowing small amounts from the line of credit almost interest free because your income sits in the HELOC waiting for you to spend it during the month. This is simply how the math works - and it does work. The CMG HOA is a great product for some homeowners, but MMA-like programs that use HELOC 2nds will beat the CMG HOA results every time on the math alone. So there are other positives for taking out a CMG HOA 1st HELOC besides paying the 1st down faster, as it is not the fastest mortgage acceleration product.

I know financial planners and CPA's on the MMA program, and they are not ignorant. They realize the value of putting "idle money" to work for them - money waiting to be spent used to cancel out interest debt. 

Suzi Orman recently wrote negatively about 1st HELOC mortgage acceleration programs. But I have not yet heard her talk about MMA-like systems that use 2nd HELOC's as mortgage chacking accounts. There are other financial guru's. like E Edward Griffin, that now endorse the MMA.

United First Financial is not an MLM company. But those unfamiliar with how true MLM's work assume UFF is one, mostly because someone else says so. Yet UFF has a similiar structure to many other industries you wouldn't hang the MLM title on, like all insurance companies and brokerages, and any retail company where sales generates commissions.

Happy Holidays!

And I have more comments to add to my list above:

Mortgage Checking Accounts do work. Anyone foolish enough to think they do not work are in direct opposition to a rapidly growing number of national lenders offering 1st HELOC accelerators. So just because YOU don't like them, you need to cool your jets on the insults. People that resort to insults fail to meet their objectives.

 The Macquaire loan's success in Australia has been nothing short of phenominal, and it's not the only accelerator product there. CMG is to date the 1st HELOC mortgage checking account leader in the US. Chris George, its creator, turned his experience with the Macquaire loan into a successful product. Because of it - and the fact that rates are creeping up now - CMG will be experiencing tough competition within the next 2-3 years as other national lenders jump on 1st HELOC accelerator loans.

United First Financials MMA Program also has some good competition. Sydney Financial Group offers a software accelerator, as does SpeedEquity (the creator of the concept), EquityGenie, the Mortage Accelerator Plus (MAP), and other new comers. Sydney also offers other financial services, as they are a brokerage. None of these MMA-like originators spend $2.5 million developing their software product.

I would suggest any homeowner interested submit their numbers to every one of these vendors and compare the results side-by-side. Also use a simple amortization calculator to see whether or not you get similiar results just applying (x) additional dollars to principal every month. For some, the cost of an accelerator program may not pan out. For most, leveraging HELOC 2nd dollars almost interest free will create a huge interest savings that cannot be beat otherwise.

If you can do it youself, you'd already be doing it. So if you're not doing it, you owe it to yourself to check these products out for youself and not be influenced by the negative blogging by people not on any 1st HELOC or 2nd HELOC accelerator programs. The math works. You simply decide whether or not you need to add a mortgage accelerator to your financial plan. 

Here's a little tidbit that could throw the whole thing off.

Why.. oh WHY are people so pre-occupied with paying off their mortgages faster?  It's an emotional rather than a financial conundrum.

My take - if you have a FIXED rate mortgage, and have a decent rate (<7%) keep paying it as long as you can, DO NOT prepay it, and DO NOT accelerate it. 

An here is why - if you have a $1500/month mortgage payment, it will not change for the next 30 years.  If you reach year 22 of your mortgage, you will still be paying $1500/month.  Do you know what that $1500 will be worth 22 years from now?  That's RIGHT!  With inflation, it will be worth probably about $600-700 in today's dollars.  By year 30, that $1500 will buy you a couple of nice dinners and some movie tickets.

So, as you are slowly paying your mortgage off, your payment actually decreases due to inflation.  Automatically. 

And if you plan on keeping the house for only 4-5 years, this whole thing becomes pointless.  The money you pump into the mortgage is the same money you can just simply pump into a savings account or a conservative mutual fund.  You'll make slightly less interest or dividends, but it will not be a significant difference.

That $3500 you're thinking of spending on software NOW?  Are you serious?  Just remember one thing - these companies are not offering products to save YOU money, they are offering products to MAKE THEM money.

My own personal example:  I have a 30 year fixed mortgage at 5.125%.  I'm in the 4th year of it.  I consider myself VERY financially savvy, have PLENTY of cash, and could pay off my mortgage any hour of any day by making a simple phone call.  I would be STUPID to do that.  WHY would I want to lose liquidity on hundreds of thousands of available dollars to pay off such a low rate mortgage?

Again, being in debt is NOT ALWAYS A BAD THING if people understand what kind of debt they are in.  Credit card debt - BAD (unless it's 0% and you pay it off at the end of the 0% period)!  Mortgage debt - NOT SO BAD!  Especially fixed low rate.

There is a lot of talk here about the possibility of the CMG Home Ownership Accelerator becoming the next Option Arm by means of a disaster. This couldn't be further from the truth.

The Option ARM, while creative and effective in its place, is till a closed end product. It will not allow the withdrawal of funds as an equity line will. Yes, in effect the minimum payment IS a cash out payment but it is very limited and has far greater negative impact than if the equity line were the vehicle used.

As for software vs the HOA, there are a few major differences that make this a clear cut decision, in most cases.

For example, with the HOA in place you have a sunstantial credit line in place as the primary source for funding most of the things in our life, reducing the need for multiple refinances over a 10 - 15 year period. Some of this is accomplished with the software but in a very limited capacity due to the size of 2nd lines of credits are usually 250K max. However, the HOA will go to as high as 2 MIL. This opens HUGE possibilities for the savy homeowner who knows that when he can earn more than his equity line is costing him it makes sense to pull it and use it accordingly. Just not happening with the software.

The credit worthiness of a HOA borrower is pretty rigid and indicitive of a borrower accustomed to seeing $100,000 platinum card offers every day and turning them down. They have proven themselves as someone who can handle the diversity and risk potential that this can present. By risk I refer to the ability to live off the available credit line without making any payment (or a minimum one as a negam). Even in these cases the negative amortization is less when making the same payment as the Option Arm would provide.

The software is effective for guiding those without the qualifying criteria for a HOA loan. There are other cases where the HOA isn't the right choice but in most cases it makes more sense to put the Equity line in 1st position to eliminate the juggling of balances to MAKE the acceleration happen. With a HOA loan, the money is where it should be and does not require juggling.

Lastly, as someone wjo has been in the business a long time I find it dificult to refer MY customers to pay $3500 in advance for an online based software. Not saying they will, but what happens if they are gone in 3 years? Then you have a customer with a 10 year plan and no way to see it through.

At least the HOA is a tangible solution, not an expensive road map.

http://www.tomvoli.com/pay-off-mortgage-early/

Tom Voli
President
NewFound Equity INC
(949) 766 5054

There is no way to convince anyone that the MMA system really works...unless they personally know someone using it and can see the software application in action for themselves.

I bought the product in fall of 2006...it had only been on the market for a short time. I bought it as an experiment for my CFPs...long story short...it has performed better than the initial analysis predicted...it has already eliminated over 83,000 in interest on my $420k mortgage. I became an Agent in Jan. 2007 and now have 58 satisfied customers who use it, love it and thank me whole heartedly.

I quit trying to convince people about 8 months ago...I get all my clients from referrals and it has taken on a life of its own. Despite the Nay Sayers and non-believers, I help people in a significant way and at the same time I generate more revenue with the MMA product/service than I do in my primary business of 12 years. By years end I will earn a 6 figure income...each month...I have only personally recruited about 20 of the 200plus in my downline. 

I know some will doubt what I say...oh, well. I guess it's not for everyone...but it sure has worked for my clients and me!

I've been trying to educate myself on the benefit of the MMA or that type of mechanism.  I believe it's a mistake to invest in the software if you can get a grasp and information from sources like this is invaluable.  I absolutely understand the concept but I still have some issues and questions.

One thing I have not seen addressed or been able to figure out is this.  If my current mortgage lender will allow a re-cast of my loan with a $10,000 payment why would I not want to do that?  I understand the higher interest cost on my HELOC but if that $10K reduction will save me $60/month (at 6% fixed) wouldn't that be a benefit?  What are the positives and negatives to a large paydown like that?

Come on...I've heard a lot of educated opinions on here and there are obviously a lot of you out there that know a lot more about this than I do so please offer some facts, opinions and advice.

 thanks.

I have to disagree with Ed, because if a customer could do all this themselves, why would they need a Realtor ? they can sell there house themselves and save thousands.  You can apply for a mortgage right on-line why use a mortgage broker? why use a tax consult? you can do your taxes yourself, mortgage accelerator, using powerful software to show a customer how to obtain there goals of paying the house off, and just like banks do put the money they have left over at the end of the month to go use, now with any product if it not use properly it wont work and just sit and collect dust, just like all those work out machine we all have in our basements or garages,  equity genie on-line show customer who will use the program how easy it is to design a plan that best suit them, our program being only 1997 which is must less then u1st program and unlike united first you don't have to use a heloc you can use a credit card or saving account www,equitygenieonline.com you can see how much a customer can save  

The CMG program is the better solution because it puts all of your interest to work the minute that you get it.  It is a set-it and forget-it tool that comes with a 100% guarentee.

You can read all about the Home Ownership Accelerator at www.thinkhoa.com

For a good article about the pros and cons of these programs, check out:

 http://articles.moneycentral.msn.com/Banking/HomeFinancing/ANewWayToPayOffYourHouse.aspx. 

One thing that is lacking in all the pro-accelaraor prponents threads is a cite to any peer reviewed aticle in a reputable banking or accounting journal - if such an article exists - please show me!   Also, per the above article, these programs have not been around in the U.S. long enough to validate them.  In other words, buyer beware!  If you want a good book on how to live below your means - try "The Millionare Next Door" by Tom Stanley ad Bill Danko. 

Thanks very much for hosting this discussion. It does seem to me that not enough treatment as been done on the tax implications. Lets say I have 300,000 in mortgage dept and 300,000 in the stock market. Because the interest on the mortage is 5% and is tax deductable and the interest in the stock market is 8% and is taxed at 15% capital gains. No financial guru would suggest selling the stock and paying off the mortgage. Thus if you have a spare dollar at the end of the month, doesn't it make a lot more sense to invest it?

Now if Icould really do electronic payments to my mortgage and reap the rewards of daily interest I would also do that. But that would not keep me from putting any extra money in the stock market rather than the house.

My 2cents.

Larry - people have different risk tolerances. If I offer to let you flip a coin, you call it. You win, I give you $2, you lose, you give me just $1. Do you want to play? Many people would say no. Paying the mortgage is a certain 5% return. Investing in the market is 8% with a standard deviation of 12% or greater. Many don't have the stomach for it. In the last 9 years, the S&P returned just under 3% with dividends. Now, you can say, 5% = 3.75% after taxes, and 3% return is 2.55% after taxes. So in a horrible period, we lost 11% (9 yrs X 1.2%) or less as we averaged in and didn't buy right at the beginning of the period. And had this been a great decade, we'd be laughing all the way to the bank. Yes my friend, that's just what I preach, I'm with you, many others don't get it.

JoeTaxpayer 

In theory, using MMA to pay off your mortgage ought to work. There are a couple of problems, though:

1) MMA's own published numbers show they are not using an optimal "interest cancellation" strategy and cost you more money, in the long run. What is optimal? Making a one-time interest-only loan from your HELOC, equal to your monthly take-home pay, and applying that to the mortgage. Run all your income and expenses through the HELOC. Pay down your mortgage, not HELOC, with your discretionary income. Pay off the HELOC after the mortgage is paid off.

Instead, MMA withdraws over twice as much from the HELOC, applying those lump sums to your mortgage, and keeping the HELOC balance almost as high. Your discretionary income is used to pay down the HELOC, not the mortgage. If you look at just the mortgage numbers, you see impressive drops in interest costs and remaining balance. MMA also trumpets the "small" amount of HELOC interest you pay to get those results. What MMA doesn't tell you is that your total interest cost is higher when you include paying off the HELOC at the end.

2) When you add in the $3500 fee and the opportunity cost, it erases any possible gains using MMA.

What is the best way to pay off your mortgage? Simply use your discretionary interest each month and keep a HELOC for emergencies. If an emergency arises, pay off the HELOC before paying off the mortgage.

Gentlemen, I am not a financial wizard by any stretch of the imagination but I am quite intrigued with this concept.  I am going to experiment with an equity line I already have open and have spent in the amount of 80K. These funds were used to renovate 2 investment properties that generate 4800 per month in income. They only have a $1000 per moth mortgage each.  I then was applying 1000 towards the credit line to pay it down. I sense by this forum I should utilize the concept discussed here and use the equity line as my check book for these properties and deposit all rental income into them.  If all goes well I may even take my 5000 a month paycheck and deposit it into the equity line as well and then write a check back to myself for personal expenses. Will this work also at reducing the monthly interest rate?  Any advice would be appreciated.

Mary, I believe I know where the benefits come from, and it would be good to get your input as someone with financial calculation expertise.  Can you validate my thoughts here?  Chris touched on this in his reply of 11/16.  The acceleration of the mortgage payoff comes from 2 places:

• your monthly discretionary funds remaining after paying all bills, which is applied, to principle indirectly through the HELOC (prepaid from the HELOC, actually)
  
• interest charges avoided or reduced by paying down the HELOC with your paycheck, and paying bills from that account.

The first of these is by far is the more powerful factor in acceleration.  Basically, if I have $1,000 dollars a month discretionary, then I will pay down the priciple by $1,000 a month.  Everybody can see how that would be a huge accelerator.

Do you agree?

Thanks,

-Kris

I'm realatively new to this board, but since I just became involved with UFF last week and have read most of the comments on this blog, I thought I'd add my 2 cents. There were a cfew features that have been left out, from what I have gathered.

The $3500 is for software, but it is also a life time membership. It provides free updates as the software is further modified and improved. It also provides LIVE support to use it and to answer any questions. There is what they call a financial Dashboard to be able to track your money and where it goes.. also to track the "actual cost" of a proposed purchase (like a wave runner or furniture) and the impact that purchase could have on the speed at which you pay off your home.

This software required 2.5 million dollars to initially develop and was brought about by a mathematician who worked for GE in the jet engine development department. The algarhythms in this program are extremely sophisticated and from what I have gathered, can maximize the use of one's "idle money" to maximize the interest savings.

Over the course of the mortgage payoff time period, wouldn't it make sense, to see if the $3500 cost would be compensated for by following the suggested pattern from UFF as compared to trying to do it on one's own? In the first place UFF only takes a few minutes a month to do. If you're trying to accomplish the same thing on your own, refiguring it would take far more time. If your loan is paid off in, say 10 years, then that $3500 comes to $350 per year or about a dollar a day.  and going through the tedious process of refiguring how much should go towards the mortgage extra this month?  If you make a large purchase, the software will instantly figure the change in payoff date.

This service is transferrable to other homes... not only one's own home, but any investment properties. Using it can help increase one's ability to move to a bigger home - by aquiring more equity so that resale is feasible without being "upside down". There is a conference coming up and they will be rolling out some new features.. One is a program for renters so they can help build savings to be able to purchase a home (That will be a lower cost.. I have no idea what, though.) I also understand that this can be used for commercial properties as well.... Again, I'm not sure about the details... but imagine the possibilities!!!

Investors love it because they can develop equity faster AND be able to take it out to re invest in other properties.

My understanding was that there was a test group in Colorado and after two years, 97% of the people are still using it and watching their equity grow.

Finally, a word about MLM companies. It seems that most posters think that MLM is a dirty word. I find that interesting. It's true that Amway and some others bludgended friends and family with rather strong and aggressive recruiting tactics. However, there are many fine and reputable MLM companies out there that have enabled many people to increase their standard of living substantially, some earning 6 figures per month. Yes, that is the exception, but I know several of them personally. There are also many folks who became MLM Junkies and signed up chasing that part of the American Dream and have very little to show for it except a passion for the biz and free products that they love. The fact that UFF has that feature is not in and of itself "right or wrong" it is a way that some of us can raise our own standard of living and help others along the way - if that type of marketing is done with sensitivity and more respectful approach.

In addition, the $3500 comes out of the line of credit, not your pocket and the numbers used to pay off your home include that initial outlay from the Line of Credit. The line of credit can come from a HELOC, a BLOC or a PLOC... including credit cards, if that works. There are other options in the works to help others become involved in this plan.

There are some very positive news commentaries on this particular company and I'm pleased to be associated with them. I feel it helps give me more options to offer to my clients..
Since the debt in this country has reached astronomical proportions, I feel this is a great way for a family to get control of their's ... and fiscal responsibility has to start at home. We certainly don't have a government to look up to and mentor with at this point...

The mortgage accelerator concept has been around for many years. In fact, most people would benefit. The problem is that UFF is a lot of money and there are better software programs out there. For example, www.MortgageMagicSystem.com has great software, and they only charge $325!!

Will this program work with an existing fixed mortgage of $400,000 & existing home equity of $85,000 from 2 different lending institutions?

will both be able to brought down simultaneously?

Will this program work with an existing fixed mortgage of $400,000 & existing home equity of $85,000 from 2 different lending institutions?

will both be able to brought down simultaneously?