Mortgage Accelerator Programs?

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I recently had a friend come to me about a program some "guy" was trying to sell him.  It promised to help pay off his 30 year mortgage in as little as 10-13 years.  He was very skeptical and so was I.  The basic concept was that you get a home equity line of credit, pull a chunk out and pay down the principal on your first mortgage.  Then you deposit your paychecks into the equity line, and use the equity like a checking account to pay all your other bills.  The result is supposedly not interest savings but rather an "interest cancellation".  By decreasing the initial balance on the first mortgage, more of your money goes towards principal on all future payments and less towards interest in the early years of the mortgage.  Now the whole thing sounded really fishy to me because he was trying to sell him this software that would calculate when to move the money around.  The other thing that bothered me was that the math was so complicated that the average Joe homeowner could never figure it out, but the flashy video presentation made it seem so simple.  However, they say the concept has been used widely in the UK and Australia.  So I started trying to calculate the math.  You have to figure in the amortization of the thing and look at the difference of what would happen over time in the complex compound interest calculations.  The numbers actually seemed to work.  But it seems to me that if it truly is legit, then anyone could do this on his or her own without paying this "guy" $3,500 for the software.  Has anyone else heard of such a thing?  And if it is on the level, is this something I should be offering my clients?

UPDATE...
I found an interesting link here:  http://articles.moneycentral.msn.com/Banking/HomeFinancing/ANewWayToPayOffYourHouse.aspx
They make it sound like a pretty good deal.  Hmmmmmm......

Also Jason Price wrote an interesting blog about this same subject.  See his comment below...

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Rainer
19,332
Marv Eisen
Estates On Line - Manhattan, NY

I don't know anything about UFF, Joe. I don't know their sales/marketing tactics. I only know they sell a (very expensive) mortgage acceleration product. There are other companys selling similar products for 300-500. Reasonable, IMO. Moreover, I didn't accuse anyone of anything, including you, and nothing I've said should have been taken personally.

Whatever your educational background, 4th grade or otherwise, you are entitled to your opinion. What I did say is that homeowners who used and followed a mortgage acceleration system would be using a system that prioritizes paying off their mortgage as compared to other types of investments.

That fact that the system could be one of the homeowner's own design or purchased as a "mortgage accelerator" is immaterial.

How it works is immaterial as well. I didn't offer any sales jargon in my posts.

But, for those who say it is a "scam", I will say that they themselves are scamming their audience. You say you recognize a scam? It's obvious you don't know the definition. There is too much evidence that the average homeowner is far better off when following a long term plan that prioritzes mortgage/debt reduction in lieu of investment alternatives - most of which have the homeowner treading water financially for over 25 years while the loan is amortized conventionally. If you are a homeowner, you owe it to your family to at least consider the ramifications of paying off your mortgage as soon as possible. Using an "accelerator" (purchased software or your own system) will reduce risk of long-term debt.

Virtually no one has a 30+ year "gig" of steady income. Tell the homeowner who is losing his home after 15 years that it was a scam. The scam is offering advice that does NOT prioritze mortgage acceleration. Sure, the brokers collected 2 or 3 commissions from the homeowner. But the poor family loses their home.

Follow your own advice. The brokers who are now crusading against mortgage acceleration are the real scam artists.

It's a fact that most people are not able to retire. IMO, it is because they followed their lender's amortization schedule (didn't prioritize mortgage reduction) and instead chased high-risk investments (or just spent their discretionary funds) and lost money in a futile attempt to create wealth.

 

Jul 03, 2009 05:25 PM #263
Anonymous
JoeTaxpayer

Marv,

I only said that MMA (by UFF) is a scam. Not a comment on any other program, and I said, already, that I think paying off one's mortgage eary is a great idea. As for myself, I only have 7 years to go on mine. I did it on my own, didn't pay for any plan.

Jul 03, 2009 07:21 PM #264
Rainer
19,332
Marv Eisen
Estates On Line - Manhattan, NY

Joe,

......and everyone else who contributed.

It's been a spirited discussion, and I'm going to leave it at that. I just want to wish everyone a very happy 4th of July Holiday.

Marv Eisen

Jul 04, 2009 06:43 AM #265
Anonymous
George

Hello, everyone here seems to forget the most important FACT, HUMAN DISCIPLINE

On a perfect world, it is true anyone that can do some logic math and a follow a plan can do it even without any software, but this is not a perfect world, just like diets the simplest of all things you want to lose weight - just eat less and exercise more - yet you see it every day people are getting fatter and they are willing to pay companies to tell what to eat, how to eat and when to eat it. 

There is no magic diet or magic financial plan there is only the fact the people need direction

The Business person that has the right mentor will go further in success

The Overweight person with the right trainer will loose weight faster

Even married couples need guidence to keep the marriage alive

 

The human factor is what makes or breaks your business, your person or your marriage.

 

but

Jul 22, 2009 07:11 AM #266
Rainer
74,325
Dan Magstadt
Paramount Residential Mortgage Group, Inc - Lake City, FL

This is amazing!! A discussion that has been goin on for oer 2 1/2 years!! I just cam across this pos t & am amazed!

My .02...this is not the program for 99.5% of the general population. For the .5% it might work pretty good...

Jul 27, 2009 09:00 AM #267
Rainer
19,332
Marv Eisen
Estates On Line - Manhattan, NY

Welcome to the discussion Dan,

This is such a widely misunderstood system here in the USA. But in countries where it is understood (it has been around for nearly 15 years), 1/3 to 1/2 of the population uses it to reduce their mortgage payments.

Its detractors have assessed it as inappropriate for all but a small %age of homeowners. That's because they don't understand how it is used. I have a different observation, in two parts:

1. Most people in the USA can not afford to retire because they spent 30 years paying their mortgage and didn't have a long term financial plan. This is a fact, not IMO.

2. The only way most people will ever be able to retire is by using a mortgage accelerator to prioritize debt reduction. Most software systems also provide a long term fiinancial plan that is easy to follow and virtually guarantees a comfortable retirement.

It is unfortunate that one company offering a software product charges an exhorbitant fee for their product, but they did not invent the system. It is also available from other companies for under $500.  

Jul 27, 2009 02:16 PM #268
Anonymous
Kate

I have been researching this concept (paying off mortgage early with no changes in out-of-pocket money) for several weeks now.  I have been in contact with one who I gave all my income/expenses to, no bank accounts, just dollar figures so they could crunch it into their "system" and let me know if this approach made sense for me. (oh yeah, their one-time fee was $3900 up front paid from the HELOC).

Twice they have not recorded my expenses accurately, and each time I have to sit for half an hour and find the error.  Anyway, that aside, I seriously want to pursue this program but unlike purchasing a pair of shoes, whereby I can go online and shop around for comparisons, I can't seem to find a comprehensive site that will show the competitors (for lack of a better term) and their programs.

Does anyone know where side-by-side comparisons of the various software can be found?  Let's face it, this software needs to be sophisticated to handle new rates, new incomes, new outflows, and who knows what else I don't even know about.  I don't mind a fee, such as $500, but $3900 seemed out of line.  The fee should cover maybe one phone call a month (?) for support as I'm sure the startup of this type of system is pretty daunting, even though those of you who are doing it currently find it old hat. 

Thanks -- Kate

p.s.  I've tagged this site as well, so any responses I can get to quicklly.

 

Sep 23, 2009 10:43 AM #269
Rainer
19,332
Marv Eisen
Estates On Line - Manhattan, NY

Kate,

Google 'mortgage accelerator' to get comparitive info. Also, check out MortgageMagicSystem.com . This accelerator is only a few hundred dollars - not thousands - and works perfectly.

You're right about it being difficult to understand these systems - because most people don't understand the functional aspects of how they reduce mortgage ( and other ) debt over a long timespan. They think it's all about making extra mortgage payments. It's more about long term financial planning and investment that prioritizes debt reduction.

Using a mortgage accelerator is one of the best ways to reduce long term debt, reducing investment risk, and assuring money will be there for retirement. Especially when used with cash value life insurance.

 

Sep 23, 2009 02:28 PM #270
Anonymous
Kate

Well, strike one against me.

I applied for a HELOC at my credit union, which I've been a member of for over 20 years, and they said my LTV was 113%, so no go.  My credit rating was over 800, I have had several house and car loans with them, all paid off and never delinquent, of course my checking account/savings accounts are there. I'm as close to a 0% risk as they were ever going to get.  Incredible.

I bought my house one year ago and it appraised for $185,000.  One year later to the day, their "software" says it appraises for $141,600.  No way.  but who do I argue with?  I'm easily at 79% LTV and the house should appraise for $200,000 as I have done extensive upgrades to this home in one years time.  I want to participate in MA on my own and was ready to go forward, step one being "getting" a HELOC, but I'm at a roadblock of sorts.  I have read every posting of this blog, I even have it saved in a text file for easy reference, and was convinced this is the way to go, without software.  I got it.  But didn't get the HELOC.  :-(

I'm just going to make extra principle payments since this extra payment would have gone towards paying off the HELOC anyway.  I realize the BIG BUMP of the one time bigger principle payment is better than regular smaller principle payments.  I have no choice.   It's been fun learning about this as I never would have without stumbling upon this blog. My loan officer said "try back again in maybe 3-5 years".

Thanks again, Kate.

Oct 30, 2009 05:38 AM #271
Rainmaker
291,056
Kate Bourland
Marketing with Kate - Redding, CA
Onlilne Marketing Mobile Marketing

Kate,

 

With the U1st MMA, you don't have to have a HELOC.  It's so much more than a mortgage acellerator product and should be referred to as a money management tool, not just a mortgage acellerator.  You can set up the system using a checking and savings account and in essence create your own Heloc of sorts.

It's too bad that people who have never used the actual tool are posting such negativity about it. 

Good luck

Oct 30, 2009 07:24 AM #272
Rainmaker
291,056
Kate Bourland
Marketing with Kate - Redding, CA
Onlilne Marketing Mobile Marketing

Mr Joetaxpayer,

Clearly you don't understand the value of the tool and what it does.  I have said it before and I will say it again - you have not actually used the product.  You told me so yourself in a conversation where you failed to identify who you really were and what your purpose was.

You have only used the demo software so there is no way that you fully understand the power of the tool from a financial management perspective.  You are entitled to your opinion, but it is not based on actual knowledge of what the product does.

The power of the U1 product has less to do with mortgage acceleration and more to do with it giving it's users a complete financial planning system that allows them to determine the best place to put their money.    Mortgage Acelleration is just one piece of that.  Most people have more debt than just a mortgage.  The MMA takes into account an individuals entire financial picture, not just the mortgage.

There is no magic bullet.  You still have to use the MMA dashboard for it to work.

And yes, I have the courage to put my smiling face, my real name and contact information in my comments.  I don't  hide behind this nameless, faceless blog.  It has always bothered me that I'm having a commentary with someone who won't identify themselves.  You are prolific with your content - but why won't you put your contact information on your blog?

 

 

Oct 30, 2009 12:41 PM #273
Rainer
19,332
Marv Eisen
Estates On Line - Manhattan, NY

Joe Taxpayer,

Your have an interesting way of marketing your "spreadsheets" (or whatever it is you are promoting).

First, you pass yourself along as an "expert".

Then, you badmouth everyone else. Ok, we get it: you're an expert at badmouthing everyone else.

From your blog you seem to know a thing or two about money matters, but judging by your website disclaimer, it seems you've taken pains to distance yourself from your advice:

"The content of JoeTaxpayer is for general information purposes only and does not constitute professional advice. JoeTaxpayer tries to provide content that is true and accurate as of the date of writing; however, we give no assurance or warranty regarding the accuracy, timeliness, or applicability of any of the contents. Visitors to JoeTaxpayer should not act upon the content or information without first seeking appropriate professional advice."

Does this imply that you're a scam artist?? Yes? No? Maybe?

No matter how good or bad your "advice" to readers, you're opinion is no more valid than anyone elses except on how your readers accept it.

Kate Bourland is representing a company that provides value, albeit at a high cost. For you to call it "scam" frankly crosses the line of slander and is grounds for legal action. I for one hope UFirst has a legal department with whom you can engage. You'll finally have a real forum to defend your position as UFirst being a scam. Judging from your defamatory posts, you apparently have some significant trust issues that you may want to explore therapeutically, but I'd really like to see them challenged legally by UFirst.

I'm not a UFirst agent, but I do sell another mortgage acceleration/debt roll-down product. And, instead of a disclaimer, I offer my clients a guarantee. Why not - it's based on solid math! I've seen your site: "financial commentary for the average Joe". Well, the average joe is drowning in debt, broke, and will never, ever, be able to retire.

Now we've discovered that it is you whom the average joes have to thank! Stand up and take a bow, Mr Joe Taxpayer!

Finally, Kate, the client: use a mortgage acceleration/debt reduction product - if you follow the system, it will work for you. Google "mortgage accelerator" and you'll find most of them.

Oct 30, 2009 03:11 PM #274
Rainmaker
291,056
Kate Bourland
Marketing with Kate - Redding, CA
Onlilne Marketing Mobile Marketing

Joe your logic doesn't hold.  A user of a product is far more qualified than a non-user to provide a valid opinion on the benefits of it.

Since you have not purchased the software you are not qualified to say that it doesn't work.  Isn't it curious that you offer a disclaimer on the content of your PPC website/blog?  Pot calling the kettle black in my opinion.  You know as well as I do that in this litigious society that everything needs to be disclaimed.

The U1 MMA has never been sold in Australia so your arugument is ridiculous.  It is not a loan product.  The True Australian mortgage is a completely different product and was extremely risky as it allowed undisciplined people to use equity in their home and keep spending more than they make.  The Money Merge Account is a Financial Planning tool that:

1.  Provides an easy to use and central location for budgeting.  You know instantly what your income and expenses are and it helps you control your cash flow.

2,  It helps you plan your finances appropriately.

3.  It allows you to forcast the potential risk/return on any investment opportunity based on your individual financial goals, income etc.  This includes real estate, stocks, annuities etc.

4.  It will help you acellerate the payoff of all types of debt including credit cards, student loans, mortgages and anything else that's out there.

5.  It assists the user in planning for retirement, college and other financial goals that they have.

So, if the only debt that someone has is a mortgage and they already have their retirement planned, college paid for and are otherwise independently wealthy, the MMA makes no sense.

On the other hand, if you are a real person who has financial goals that will likely change over the course of  your lifetime, the MMA is an excellent resource/tool.

As for people who argue against it?  Most of those people see the MMA as a risk to their commissions.  Most financial planners, stock brokers ect make a commission based on the products that you purchase from them.  I believe that these people are fearful that the Money Merge System will steal business from them.

The money merge account is an advanced software tool.  It is not financial product in and of itself.  The user still has to make sure that the financial products and choices they make are valid.

As for googling - there is a lot of inaccurate out there too.  Just look at your content on this topic.

Nov 04, 2009 06:51 AM #275
Rainmaker
291,056
Kate Bourland
Marketing with Kate - Redding, CA
Onlilne Marketing Mobile Marketing

Great, that means that you are not a candidate for the product.  That doesn't have anything to do with the validity of it.  Just because it's not a right fit for you does not give you the right to call it a scam.  Period! 

You are not qualifed to comment on a product that you have not personally used!

Nov 08, 2009 05:22 PM #276
Rainmaker
291,056
Kate Bourland
Marketing with Kate - Redding, CA
Onlilne Marketing Mobile Marketing

As for Factorial Math - it's about looking at all the options available and choosing the best choice mathematically:   http://mathforum.org/library/drmath/view/57588.html

Nov 08, 2009 05:46 PM #277
Rainmaker
291,056
Kate Bourland
Marketing with Kate - Redding, CA
Onlilne Marketing Mobile Marketing

Joe, you just validated what I already knew.  You don't understand the basic concept.  By assuming that the interest rate is the only factor that matters you irgnore that balances and minimum payments also come into play.   It is not necessarily true that paying off the highest interest card will result in the fastest path to paying off debt.  Freeing up the cash flow from lower balanced/lower interest cards could result in having more disposable income to put towards the higher interest card thus eliminating all debt sooner.

That's why it's called Factoral Math, all the factors come into play, not just the interest rate. 

It's much more than just a static number on a spreadsheet.  Mortgage Acellerators help users find hidden cash leaks and helps find disposable income that is not currently working for the them.

U1 is not a scam.  It is an award winning product recognized by industry leaders including Ernst and Young.

Your opinons are just that opinions, not fact.  They hurt consumers and United First Financial.

Nov 10, 2009 05:49 AM #278
Rainer
19,332
Marv Eisen
Estates On Line - Manhattan, NY

Joe,

Dave Ramsey counsels the opposite of what you are denigrating, and for reasons other than pure numbers, but that are statistically more succesful of producing a better result for most people.

You don't have to teach arithmetic to anyone here, and there's more to successful debt management than basic numbers.

If you have a product that helps people, then continue to market your solutions but in the real world, if numbers were the only factor determinging the outcome, there would be no need for statistics. That is far from the case, and numbers are only one part of a solution. It's quite obvious that you express a narrow minded view of any system that doesn't square with your beliefs.

There are millions of people who do things differently, and then there are people like you who say "my way or the highway". IMO, you cause a lot of damage by misleading people who need financial help - but not your type of financial help. Maybe UFirst's, I don't know. But I do know that whatever works for them - works for them......Yet, you drive them away from a solution that can help them.

I find it disturbing that you have such little faith in your product that you find it necessary to denigrate others. In the words of Rodney King, "can't we all get along?".

Mortgage acceleration is the only way most people will ever be able to retire. Before you take me up on that, read my post #280 above.

Nov 10, 2009 08:48 AM #279
Rainer
125
akash gupta

Mortgage Deals

 

 

The initiative taken for the concern is very serious and need an attention of every one.

 

Oct 11, 2010 08:01 AM #280
Anonymous
Lin Ennis

Yes, Tony, as you said, "The numbers actually seemed to work." While online software can calculate the math to the penny - and not all are alike - it's also possible to "wing it" with a guess...which is what I did for two years before I wrote about it in Let Your Mortgage Make You Rich!

We feel very fortunate here in Sedona to owe under $150,000 on our home after eight years.

Jun 02, 2011 05:25 AM #281
Anonymous
joetaxpayer

Is UFirst still in business? I heard they were barred from business in Canada, and selling the company to a new one.

I have one question if an agent would like to answer - In the example, $200K 6%  loan, $5000 net income, etc. The client has a full $1000 discretionary income every month. Right? That's the example.

In real life, what % average are you seeing for this extra income? 20% is high, and unrealistic. Before MMA, where was that $1000/mo going? Why were these people drowning in debt in the first place? Even the example analysis is contrived and the game rigged.

Jun 02, 2011 11:59 AM #282
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