Keith,

Thanks for the comments and presenting the other MMA programs.  I know CMG focuses on the single loan, but the HELOC example the others use, whil ebeing slightly more efficient, work basically the same.  I used CMGs simulator for this example as anyone can use it (they don't hide it from the public as many others do).  You mentioned the gist of the program, dump your money in, slowly take it out.  That is how they work. 

The reason I did this post is twofold.  First, they are a product worth looking at because they do fit some people's situations better than taking a long mortgage and keeping it.  That is why I added CMG's product to my list.  The other reason is that these are the latest "fad" in marketing and are, no offense intended, deceptively advertised much like the way Pay Option ARMs are advertised heavily as a 1% rate. 

Running various scenarios with my previous (and current) clients, I have found these programs to only fit about 15% of the people.  Since most people selling these products only sell these products, they will push the sale over and above the best interests of the clients.  This post is to express how these products can be beneficial for some, but more costly for most and that a true professional, offering more options and an unbiased comparison, is needed to provide the best solution.

I will watch the video later, but I know a lot about these programs, their origination, how they work, etc.  I have researched them extensively.  Their origination was Australia, where they are most prevelant and have expanded and are becoming widely used in Europe, notably in the UK.  One reason they work there better than here is that these countries do not provide 30-year fixed rates and only recently started offering their version of our 5/1 ARM (advertised as a fixed rate loan).

Also, in the current marketplace, especially since we have an inverted yield curve right now, I would not recommend using a HELOC to extract equity to fund the side investments and certainly not while trying to do the MMA (it defeats the MMA purpose).  HELOCs are higher interest rates and are variable, causing the potential arbitrage to be minimized or even eliminated.  Using non-deductible debt to pay off a mortgage is not advisable either. 

Again, I like these products and I want to thank you for your comments, but I also want readers to fully understand that they need to seek a profesional that can offer an unbiased comparison and provide the best solution for that specific family. 

For the consumers reading...please do your own research as well on all of your options, dont rely on just one source for all of your information.

For those who would like to listen to a little about what I say regarding the issues surrounding MMAs versus mortgage planning strategies, click here and you can hear an interview Brian Brady did with me.

Keith,

Thanks again for the comments and I like the open discussions.  Gives readers various ways to look at things which is what we all want.  I am also glad to see you are one of the ones that offer other solutions.

I am not attacking the product itself (it is a good product) nor anyone in particular that offers these products (I would be attacking myself if I did since i do offer this solution as well).  Rather, as we have both stated, people need to see a variety of solutions and work with a professional to determine which is truly in their best interests. 

Regarding the advertising, most often it is not too bad, but I have seen some false and/or misleading advertising all over the interent regarding these programs (I was even involved in getting a "rogue" site shut down.  You see "revolutionary new product that can pay off your mortgage in 8 years" touted like mad (just like the 1% rate) as if it were already the best solution without offering realistic examples or, in many cases, explanation as to why.

Using me as an example (little debt outside of the mortgage), I ran my own scenario through the "simulator" and the result was 24 years, highlighting the need for a comparison approach.  That is why I did the post to show a comparison that is a real couple and an unbiased comparison for them.

Even the post shows that if their main goal is to pay off their mortgage as fast as possible, then the MMA is the way to go, but it also shows that if your goals are different, other solutions may be better for you.

I also agree with the Option ARM, another program I really like, given the right solution.  The bottom line is that Americans need to find a true mortgage planner, offering a wide variety of products, that can develop and help implement a mortgage plan that "fits" the uniqueness of their situation.

Once again, thank for the comments and discussion.  We differ in some things, but I think we agree that the consumer needs to see a variety of solutions, including this product.

Mike,

Thanks for the comment.  You have highlighted why the product is clearly the best for some, but only some.

As you mentioned, using idle equity to be repositioned into appropriate investment vehicles is also the best for some.  You also pointed out that many who start their "plans" fail to maintain them, which is the case for any plan, whether mortgage, financial, or otherwise.  These are the people that MMAs are best for.

Regarding home ownership, with or without a mortgage you own the home.  By paying off the mortgage, you may own your home outright, but give up a lot in lost opportunity costs.  Additionally, you probably will not have access to that trapped equity which creates a potential liquidity problem.

I am also not sure how you come up with a the tax scenario being "tax-free" as you mentioned, which depends on the family and has nothing to do with the MMA itself.  I agree with the need to place your money in a tax-free growth vehicle as you mentioned, but the MMA is not a tax-free vehicle.

Don't take me wrong, I like the MMA programs, but they, like every other loan program, need to be a sure fit or "customized" to fit the family and their unique situation.  Thanks again for your comment.

Keith...thanks for continuing to comment.

David,

Thanks for the comment.  The MMA is a good product for some.  It is not a "magic bullet" or anything like it, as it is some times marketed.  There are some flaws and in order to maximize its effetiveness, discipline still needs to be imposed or it will not work as advertised.

The bottom line is that anyone that is looking to maximize their wealth over time needs to seek a mortgage professional that is a true mortgage planner and can weigh ALL options and assist the family in implementing the best mortgage plan for their unique situation.

Thanks again for the comment.

Jaime...Thanks for sharing your views.  They seem to entail the true need for a balanced look at all of the client's options.  I am glad to see that it is working for you.

David...I agree that the Option ARM is a great product, just like the I feel about the MMA, but as I have mentioned before, neither product fits everyone and I don't like the way either is advertised.  My personal opinion is that interest only loan options fit the client better in most situations, however there are times when the Option ARM is best.  There are also those that the MMA works best for as well.  Only time will tell whether or not these loans will develop a bad reputation as the Option ARM has due to it being sold to families that really shouldn't be in the program.  Thanks again for your continued comments.

Wow, this topic is getting such strong responses recently and I guess I shouldn't step away from this site for that long anymore.

First, Jaime, welcome to the discussion. 

I think it is very clear at this point that the MMA programs are beneficial to some, not all, like every other loan program out there.  The key is to get with one or more professionals that offer a wide variety of loan products (solutions) to meet your specific needs.  I have to state that Certified Mortgage Planning Specialists are one of the best for this because they have proven their level of knowledge and the CMPS designation is trademarked, unlike the "Certified Mortgage Planner" or other so-called designations.

Jaime, I agree that their is nothing definitively wrong with being out of debt, however, what is debt freedom?  It can be said, and is true, that if you have enough liquid assets to pay off your debts any time you want, then you are debt free (even though you still carry the debt).  The reason is that you are not a "slave to the lender" as the Bible states. 

I believe in the Bible and know it has great wisdom.  It does not say to never take out debt, but to not take on so much debt that you become its slave.  That is one key point to remember in this discussion.  The other relates to the Parable of the Talents (Matthew 25:15-28).  The key question here is what is the difference between burying your money in the ground or in the walls of your home? 

The post above was to show that with proper planning, and the right professional offering all products, you can achieve your specific goals.  The couple above, if they decided to get out of debt would choose they MMA product, but if they were to choose to grow their wealth more over time, maintain a more liquid position, and achieve a better rate of return (the rate used in the example could be improved relatively easy), then the clear answer is to keep the "debt" and use a the loan to boost their financial position. 

One website people can see this out (although I need to rewrite it) is www.flmortgageplanner.com.  Read through the whole page (it is relatively long) and you will see some of the reasons why keeping the mortgage may be the better option, even if you could get out of debt faster with the MMA.  Of course, you can also visit my main website at www.solidrockmortgage.com and read some of the information I have there, but I need to update the site to include the MMA type program and other pages about mortgage planning as well.  I will likely be adding these pages later this month (after taxes are completed).

Thanks again to all those commenting and discussing this product.

Jaime,

No Problem.  I figured you were talking about me as I read the comment.  You are correct in that many people vary their interpretation of the Bible.  Personally, I don't like to follow a "religion", just what the Bible says.

As for the discussion, I agree with you, Jaime, there is enough info here to hear all sides of the point and allow the reader to formulate their own opinion.  I am only continuing to comment as I was the original poster of the topic.

Thanks again for everyone's comments here.

Neil,

Thanks for the contribution.  The fact of looking at all options non-exclusively and assisting the borrower in choosing which option is best for them has been my point since the beginning and the reason I started this post.

If anyone pushes one product or, even worse, sells only one product, then they cannot be guaranteed to be working in the best interests of the borrower, and dare I say, could be misconstrued as in it for the money only, which is the case of many in the profession.

Thank you all again for your contributions.

Jake,

The comment was removed by me as this post has had a lot of "spamming" attached to it lately.  I had left some comments in from earlier, but you can see everyone is not just trying to post comments, but get people to their own site.  I welcome you to join AR and would be glad to have you.  But for now, I am basically removing all additional comments to this post that seem to be more advertising than not.  Sorry if I did this in error to anyone.

Ron,

Thanks for your contribution.  I sorry you think I have not been honest, but I am not sure what you are referring to, maybe a previous comment I deleted as spam?

Regarding paying for the program, if they can do it on their own, let them do it.  That is another reason why I say it only is for about 15%.  Some people need to be "spoon fed" how to do things or have a method to ensure they follow the plan.  They are not necessarily helpless, as you put it, but they get caught up in other things and need simplicity to make it work.

I never claimed to be an expert in all fields, but I know a lot more than most regarding all aspects of proper mortgage planning and how to integrate a mortgage into a financial plan.  Also, I have experts I work with in other associated fields to make the whole plan work.  

I have always advocated doing your research and working with someone you can trust.  Also, shop around, I certainly am not the only person that is an expert in this area and I only do Florida anyways.  I welcome questions and such which is why there are plenty of comments above that show other ways of doing things.  Check out my other posts and you will see many cases where people disagree with me and how I handled it.

Again, just like you mentioned, people need to research and shop around for the professional they think will be the best fit for them. 

And, despite what you may think, I am an expert in two fields...Mortgage Planning and Flying Planes.  People trust me with their lives, why wouldn't they trust me with their mortgage?

JD...People can manage who can manage the numbers themselves are those that can watch for the scenarios you talk about and see them coming.  They can keep their HELOC balance just high enough they do not need to worry about when the deposit is made.  The ultimate goal is to use the average daily balance advantages of the HELOC to take advantage of the monthly computations on your main mortgage, so using the HELOC to pay off portions of the mortgage at the beginning of the month and then depositing money over the course of the month makes this work.

The pressing issue is not whether or not the MMA works, as I have pointed out, but rather is it in your best interests based on your overall situation.  This product is being marketed heavily, in part as it is being recruited under a multi-level marketing type business, so they make more if they recruit people and sell more.  They only sell one product and do not take a lot of other factors into the equation that I have shown above in the original post.  The bottom line is that paying off your mortgage this way, or others, may actually cost you more money over time!!

Thanks for your contribution.

Cfile...Yes, if you look at the numbers at the bottom, I clearly show that after 30 years, even if the family put every dime of their mortgage payments and discretionary income into an investment account every month after their mortgage was paid off, they would have lost $112,497!!!

Regarding the wealth part, there are many different ways to grow wealth.  The MMA is not the best way to grow wealth over time as you devote your money to the mortgage and "lose" the opportunity to gain elsewhere.  This post proved that.

I recently came across this video created by Bill Gruntler who is with the Institute of Mortgage Education.  This video sums up a lot of what has been discussed here and they provide information, but do not sell mortgage products, MMA or otherwise.  Check it out for yourself...

http://www.mycustomvideo.com/stream/BillGruntler1.html

JD,

I guess you don't understand what I am saying in the post or otherwise. I am not "bashing" the MMA program in and of itself.  People can mange money just as well, or at least close to it on their own.  The thing you guys need to understand is that I understand more than you think and I also know that MMAs are not necessarily the best thing for you and I showed it very clearly in the post.  I suggest you actually go back and read it. 

The video actually backs up what I do, which is take an array of loan options, including the MMA style, and integrate the mortgage into a financial and invesment plan.  It doesn't say the MMA is wrong, nor do I, but that you can do better through looking into all types of loans and investment scenarios.  I alos have a financial planning background, run two businesses, and understand home equity is not a safe investment. So why dump your money into the home and put it at risk and earning nothing when you can do better elsewhere and take on less risk?

You can continue to try and discredit me any way you want, but reality is reality.  MMAs are good for some people, but the majority of people will likely be better off using proper mortgage planning strategies and using their mortgage as an integral part of their overall financial and investment plans. 

OK, now you are confusing me as I thought I was talking with JD, but Cfile responds.  Do you mind telling me if you are one and the same?  And if so, why use two different names?

Now, it appears as if (JD) is trying to discredit me as being either inexperienced or , as he put it, ignorance.  Neither is true as I think I have made very clear throughout this discussion. 

OK, the National Savings Rate has been negative before, but recently it hit its lowest level since the Great Depression, that is true.  The clients I recommend strategies to do in fact follow through and invest the savings.  If they didn't, I wouldn't invoke the plan.  I actually turn away a lot of prospects that come to me because I know through my questionnaire and process that they will most likely not follow through.  Hence, the clients I take on leaves the assumption out of the equation.

Yes, I would advise someone to refi from a 4.875% fixed rate to a 6.625% if it ultimtae would save them money and build their wealth faster.  It depends on their situation.  I factor all costs, time value of money, tax implications costs, loads, etc.  All of them are factored into the equation.  Can I guarantee the rate of return on the investment? No, noone can.  Just like you can't guarantee the value of your home either.  But I use conservative numbers in my calculations based on history.

Regarding risk, everything contains risk, the idea is to minimize it.  The risk involved with MMAs is that you are storing your money in your home and home equity is not a good investment.  You may save money on interest, but you lose money that you could have earned elsewhere also.  Additionally, home equity does not have a rate of return and carries risk as well, so the MMA program does carry risk.

In the scenario I ran, I stated you could have your loan paid off in 6.9 years (less than your 7).  I am not sure how you managed to get diffenrent numbers than i did, but I would be happy to review your numbers and post accordingly, I have nothing to hide, but I am trying to help people understand that the MMA is not the only way to pay off your mortgage and may not be the best. 

Thanks for the discussion.

JD,

Thank you for clearing that up.  I do understand the concepts and the ideas behind the MMA program, but also know that there are better strategies you can do here in the US that you cannot do abroad.  The program started in Australia, if I remember correctly, and has blossomed in other countries including the UK.  As I have said before, it is not necessarily a bad program, just that there may be better ways to pay off your mortgage and here is part of the reason why...

Australia, to use as an example, did not have true fixed rate mortgages and all loans were subject to increasing interest rates.  They have only recently adopted a "fixed rate" loan program, but this is not a true fixed rate as it closely resembles our 5/1 ARM products.  Any HELOC is subject to interest rate risk as well here in the states, so borrowers can minimize their risk by maintaining their fixed rate loan and instead of paying it off, use that low interest to invest elsewhere conservatively and provide more liquidity, safety and even rates of return, especially in a rising interest rate market.  Please refer to this blog to understand how easy it is to make money...How to Earn Money by Borrowing at 6.0% and Investing at 4.0%.

Using proper mortgage planning strategies, like the video link I posted suggests, and my initial post here states, one can achieve more wealth while maintaing increased liquidity, safety, and rates of return by not focusing on paying off the mortgage and taking advantage of other opportunities.  It depends on the specific situation of the family and to say anything otherwise, without a throrough analysis of all options, is not a valid statement.  That is why I state clearly in the post, if your only goal remains to pay off the mortgage, the MMA works to pay it off the fastest way possible, but if your goal is different than that, the MMA program may actually cost you in the long run.

I do not intend to mislead people as I have seen many UFF and other MMA supporters do, such as using the Asher Institute report as fact.  That report is extremely distorted, although it does have some fact to it.  Also, to not factor in investments on the side and other loan programs as well as strategies, is not a valdi assessment of the family's best interests. 

I am simply pointing out that anyone who sells only one product line, per se, cannot be objective in their analysis, nor can their be certainty that the client's best interests are served.

I would be happy to discuss this more, but I suggest, as cfile did, email me your contact information and I will schedule a phone call to discuss it more and you can see my side better and I can see yours.  If I am wrong in something, I will freely admit it.

Luke,

Thanks for contributing.  Regarding your situation, I would have to see your overall picture, but in general you are correct.  You would be better off placing the money elsewhere.  I doubt you will achieve 10% or greater return, but it is possible outside of the home, whereas with the MMA, you can only effective save about 2/3 of your mortgage rate, ie 4% on a 6% mortgage and once your home is paid off, then you are "free" to start your investments. 

Please refer to this post to and see how easy it is to make money elsewhere...

How to Earn Money by Borrowing at 6.0% and Investing at 4.0%

After that, if you would like me to review your specific situation, please contact me and I would be happy to give you a thorough analysis.

Anytime, I am happy to help.

For those interested, I was recently interviewed by Brian Brady and the interview was posted to the Bloodhound Blog.  This was one of the topics that arose during the interview.  Click the link below if you would like to listen in...

Interview With Robert Ashby, CMPS

Eric,

Thanks for weighing in.  I am glad to see others out their who understand equity ofr what it is worth, nothing.  I put up a new post, link is in the post above, that shows how Equity Harvesting, using this same couple, would give them and additional $1.5 MILLION dollars over the same time period, something the MMAs cannot do and that proves that these programs are not likely to be in the best interest of anyone in the United States.  Other countries, maybe.  You brought in some very good points and it follows what I do as well.

Luke,

No disrespect, but this post was the closest example of someone real I could find that could benefit from the MMA, certainly paying their mortgage off faster.  But the post also shows that if your goal is not simply to pay off your mortgage as quickly as possible (which I do not recommend), then proper mortgage planning will generate more wealth over time.  My MEDS™ program ensures that you have the best mortgage that WORKS for you.

Paul,

Thanks for stopping by and adding to the conversation.  The only stupid question is the one not asked.

Regarding the other post, that is designed for someone who has equity to begin with, but there is also a very important message needed to be learned on how to set up your original mortgage when you purchase a home.  How you obtain financing on your first home can have dire consequences for the long haul.  Here are two posts that address those consequences...

The $25,000 Mistake caused by the "Myth-Conception" of Mortgages
A Tale of Two Brothers

There are other concepts that people need to learn as well, so I have a sister website I run, although not written very well yet, that covers many of the misconceptions surrounding mortgages. Click below to visit that site...

www.flmortgageplanner.com

Take a look at these and then please contact me via the email link on the top right side and I would be happy to answer your questions (or any other readers for that matter) time permitting.  I already have one or two people on my list to contatc when I am able to discuss the topic further.

Thanks again for your inputs and I look forward to helping you understand better.

Paul,

Paying off the house is not necessarily the best thing for you, and in fact, you can do better elsewhere.  I know the concepts are difficult to realize. 

The MMA sellers certainly do not understand them.  The bottom line is that those pushing the MMAs sell one product only and cannot, by the nature of their business, work in your best interests.  They also do not understand Home Equity has risk.  I understand both sides, which is why I posted this article.

Please let me know what questions you have and I will do my best to help you find your best solution.  Remember, if you are not located in Florida, I can't make money so it would be a guaranteed unbiased opinion.

Thanks for the continued discussion.

Gary,

The MMA has several risk factors, one of which is the innate risk associated with home equity.  Another is interest rate risk.  These are just two, but there are more.

Yes, amortized loans are front end interest loaded, but the excessive rates you and others state and simply outrageous and misleading.  By your own calculations, an interest only loan would have an infinitesmal rate of return, which is absurd.

Also, the MMA does not allow you to become your own bank as easily as other loan products and is certainly more expensive in the long run.  Who wants to finance their vacation at 10%?  (Just an example so don't get irate over it). 

I appreciate the discussion, but use realistic examples like I have, not distorted facts.  Thanks for adding to the discussion.

Paul,

I am going to have to answer these later, possibly over the weekend.  I had responded to all of your questions, but the post got deleted and unfortunately did not save them.  I am in Mexico City right now, so I will respond when I get back to my office computer or home computer.  Sorry for not being able to respond faster, but the internet here is "tricky".

Paul,

I do not mind doing pro bono work, but it is time permitting.  I finally got back to my home computer, so here are the answers you wanted...

1)  I do not like to use "effective rate" as that is what the MMa backers use as an outrageous rate and I want to avoid confusion.  Their formula for calculating "effective rate" is simply how much interest you paid in comparison to how much principal.  Using their calculations, the "effective rate" of an interest only loan is infinite and that is just absurd and impossible.

Now, regarding the net after-tax rate (or cost) of your mortgage, you were right on. 

2) The only problem with your calculations is that when using mortgage planning principles, we usually start with a fully amortizing loan payment, then use an interest only product.  The reason is that we want to make sure you qualify based on fully amortizing, because if you don't, you have no business being in that house or loan product to begin with.  Next, you take the difference in monthly payment, add extra payments ($200), plus the tax savings and that is the contribution to your investment account.  I do not have time to run numbers right now, but you will end up with more than $180,000.  So, you have increased liquidity, safety and rate of return.

3) There are a wide variety of investments that are tax-free or will yield an after tax rate of return above 6%.  Yes, muni bonds generally require large amounts of money, but remember that there are bond funds as well.  They carry a management fee, so will not return as much, but they will return fairly close to the same rate.  Also, other vehicles are available and the list is too long to explain here.

 Second grouping...

1) Depending on your qualifications, many times Interest Only (IO) loans are the same rate, but sometimes are slightly higher.  They are also available as a 30 year fixed rate with an IO period up to 15 years.  These are a excellent product if you do not want to be in an ARM.

2)  You can do 100% financing and still not pay PMI.  It depends on a lot of things, most of which is the loan structure and your qualifications.  Work with a planner that will look at all scenarios, including LPMI, and they can guide you to the best solution.  Sometimes, like I client I closed this week, it was in his best interest to put 20% down.  That is one reason why you have to work with someone who looks at your overall financial situation, using multiple loan products, and have the expertise to guide you to the best solution.

I hope these answers cover the topics satisfactorily.  If not, please keep asking questions.

Paul,

It is no problem.  I want to help as many people as I can and the internet is a great tool to do just that.  It would be nice to meet face to face, and maybe some day that will happen.  I am currently back to flying with American Airlines which is why I "bounce around" a lot, but it may take me to your area someday.  Right now, I head mostly south out of Miami.

My recommendation is to fully understand the truths and avoid the mistakes and misconceptions.  Also, try to avoid the ones that use deceptive tactics to lure you in.  They are all over in this business.  Please feel free to post more questions here or contact me via the link on the top right side of this post.

Thanks again for the discussion, hopefully it is helping others as well as yourself.

Eric,

Thanks for weighing in.  Missed Fortune 101 is a very good book to read as is Mortgage Mistakes and Misconceptions by Sanford Mappa.  I have not read Stop sitting on Your Assets, so I cannot give an opinion on that one.

There are a lot of people in the financial arena that are realizing that proper mortgage plannig is the key to financial success.  Even the Federal Reserve (Chicago) wrote an extensive report last August that highlighted this fact.

Paul,

Thanks for your continued discussion.  I will give you my take on that link later when I get a chance to read it.

Casey,

I am not threatened by the MMA, I actually offer those type of products as well and I have not been very negative about it.  The truth is that it is very probable that you can get a better rate of return elsewhere and it does not take discipline for most people at all.  It depends on their situation, but for some, it is a one time shot ad it is completed, nothing else needed.

I fully understand interest cancellation as well, despite what you may think.  The problem with the MMA is that the if you run into a crisis, say have to buy a car or something, then you do not have the money to pay cash for it or borrow it from your own personal banking system.  The only choice you have is to take money from your ALOC/HELOC and finance the car at whatever that rate is, or finance the car elsewhere and not receive a tax deduction on it.

Please keep in ind that I am showing both sides of the equation here, as fair as I can be, but everyone reading needs to understand the concepts, truths and avoid the mistakes and misconceptions that surround mortgages and home equity.

So, Casey, I suggest you take a different tone and fully understand what you are saying.  I will add to this comment when I have more time to analyze your answer.  In the meantime, thanks for joining the discussion.

First off...I have told people that no more links to business websites will be accepted, so please adhere to that.  There are enough links on both sides of this equation already to make the information available to the readers.  I apologize for the inconvenience, but this has been a hot topic as you can see and "spamming" for business will not be allowed.  I have left some links above for those who want more information, but I do not recommend clicking any links, including mine, to use as anything other than additional information gathering.

Now, to those whose comments got deleted, you may provide input as you feel inclined, but keep it in a discussion tone as we are trying to maintain and no links to business sites anymore.

Chris,

Thanks for chiming in on this discussion.  I think you hit a very real, but unfortunate, aspect of these programs.  That being said, there are a few people that would likely benefit from them, but this is no where near the "magic bullet" sellers of these are making them out to be.  It is also sad to see the much of media endorsing these as such.  But then again, no offense to journalists and other media, when do they ever do anything correctly, especially when it gets them business.

RHA,

Thanks for joining in the discussion as well.  You may find that when looking at the majority of the wealthy, they opt to continue paying their mortgages.  The reasons are already posted throughout this discussion, but basically, they understand the misconceptions about mortgages and home equity and refuse to make the mistakes the vast majority of Americans are making.

Regarding negative comments, I have only heard of one person so far, but these have only recently been heavily marketed, so for the most part, they have not had enough time for the majority  of people to see if it really is working for the most part.  This person had it for several years and stated it did not work as planned.  I do not know which program he chose though.  Everyone gets excited and does the program at the start, but it will be interesting to hear how they feel about it when they run into a crisis or their cash flow changes for other reasons.  Without the cash flow, these programs don't work.

I will use myself as an example of someone who these are absolutely the wrong way to go.  I researched them for myself, ran a comparable plan, and it told me I would pay off my mortgage in 23 years!  My mortgage plan I am on is on track to be in a position to pay off my mortgage in less than 13 years and I am not adding anything or doing anything right now to it, no discipline required other than to review my plan annually. 

Keep in mind that that is my personal situation and everyone is defferent and again highlighting the need to work with someone who looks at ALL options and helps you choose the best solution for you.

Paul,

I finally made it to the link you provided.  Here is the comment i posted over there...

Let start by saying that I am a CMPS designated mortgage professional. I did not get a chance to read every comment as I would like, but I wanted to add to the discussion.

Missed Fortune, as with just about every book ever published, has an agenda. This book was to educate people about the investment-grade life insurance side of investing and was "selling"that point. However, even though he "pushes" that concept, the information in the book is accurate.

His anlaysis of the common "myth-conceptions" about mortgages is absolutely correct. You may not want to do the life insurance contract as he recommends, but there are a lot of strategies for you to increase liquidity and rate of return.

Ric Edelman, Bert Whitehead, Sanford Mappa and many others have written books about this subject, so don't stop at just Missed Fortune 101. After seeing the truths about mortgages and home equity, then decide what path is best for you.

RHA,

Sorry I did not remember to answer that question the first time. 

Currently, I do annual reviews for free as part of the overall package to clients who close loans with me.  I suggest that everyone review their plans annually, or at least once every 3 years, to ensure they are keeping on track and adjusting things if necessary. 

Different homeowners have different siuations and require different plans, so the cost question is not an easy one to answer.  Some people prefer to do "equity harvesting" which requires a cash-out refinance every 5-7 years or change of homes to achieve the same effect.  Keep in mind that the average family is only in a home for 7 years, so the difference in costs between using mortgage planners like myself and doing your "normal" life is minimal or nothing.

But, let's say they are not normal and stay in their home fo the 30 year.  As far as costs go, it still depends on the client's situation.  With my services, generally there are little or no costs involved as typically there are no "major" changes needed.  The only costs involved if a client needed them, would be the costs of a cash-out refinance or rate-term refinance if they chose and/or needed it.  The only typical cost I use if the plan stays on track is the refinance at the 15 year mark and that is already built into the comparison above.

Thanks for continuing the discussion and I hope I answered your questions satisfactorily.

Paul...The link issue was not sirected at you, but rather two other comments similar to those that have been posted before that have "advertising" style comments with direct links to their business site.  Anything that offers more information is OK and I want people to have all the "real" data available to them. 

Your link was perfectly acceptable as it was to a blog post that someone else had done and you were looking for an opinion.  Thanks again for the continued discussion.

Charles,

There are many people in the financial field that endorse these concepts.  There are also others that practice this themselves, yet do not offer it to clients. 

Also, I do not recommend it to everyone as I have stated clearly.  It depends on the client, and it is the same for the MMA programs.  I have a unique rocess called MEDS™ that ensures the strategy is "suitable" to the client, the client understands all pros and cons, and the client agrees.  There is not a single client I have had go through this program that I feel is "at risk", and in fact, they are better off.

Regarding 8%, that is not that hard to do, and in fact, any 20 year period in the stock market shows the S&P 500 to yield about 12% annualized.  There are also more secure investments that are currently yielding at least close to this amount.

One other thing is that the mortgage is fixed rate.  Let's assume a rising interest rate market.  MMA program's interest rate rises as well, but the fixed rate does not, allowing the homeowner to take advantage of a major benefit.  They borrowed low and their rates of return on investments will rise along with the interest rates.  Just look at history to see this fact. 

In the early 1980s, mortgage rates were around 18% and investments were around 15% (safe investments).  How would like to have a mortgage you took out at 6% and saw these rates again.  I would love it as I would be making around a net 11% on my money and have my money liquid.

Also, you fail to discuss the falws of home equity as an investment.  It carries risk, is not safe and is most certainly not liquid.  In other words, it is a crappy investment and any savvy financial advisor would tell you that.

Thanks for joining the discussion and we all welcome your opinions.

Casey,

There are several risks associated with the MMA program, even though it is toughted as a "risk-free" program.  Interest rate risk is but one. 

There are risks associated with home equity.  Home equity is not a safe investment and carries risk, therefore paying off your mortgage as fast as possible carries risk related to that fact.  Also, if someone does not have the discretionary income necessary or suffers from decreased cash flow later, the MMA program will hurt them, so there is some more risk.

Everything carries risk, just as everything is 100% financed.  People need to understand those concepts and then decide which porgam(s) are best for them and that is why they need to work with someone who shows all options, not just one product.

Casey,

I fully understand what the MMA is all about.  I know it is designed to cancel interest to pay off the mortgage faster.  I know it works with no discretionary income, just not very well, and no where near as well as it is advertised.  There are better ways to pay off your mortgage or you may not even want to pay off your mortgage, really.  There are also better ways to achieve cash flow for your benefit, not locking it into a mortgage.

I have seen presentations, videos, etc.  I would be happy to attend one of your seminars, and I will even keep my mouth shut.  I just need it to fit into my schedule.  And as I have said, these programs are good for some, an estimated 15%, but for the rest, these are a waste of money.

To the unknown commentor...There are some differences, but they are all attempting to accomplish the same thing.

Casey...I still have to disagree with you on the MMA being better for the average family.  I agree that the MMA can be a better alternative to nothing, but they still have to use it. 

I also agree with you that there are a lot of Americans in the wrong loans because they used the wrong mortgage personnel.  I have blogged about this many times before, stressing the importance of finding someone who can analyze all options and assist the borrower in developing a plan that works best for their specific situation.

Using proper mortgage planning, a family stands a much better chance of being more fiscally sound than going with any other professional that sells only one product/solution and does not demonstrate the expertise necessary to develop a plan that is truly beneficial to the family.

DONL...The percentage of savings varies depending on how well you use the program among many other facets involved.  The best way to think of it is you are not paying interest (or saving) the equivalent rate on your mortgage (minus any tax advantages you may have had by keeping the mortgage).  Other than that, there really is no rate of return on your money, just as there is no rate of return on your home equity, ever.

David...Peace of mind is not a rate of return, but is a "feeling".  Does paying off your home really give you a peace of mind, especially knowing you could have more wealth by using other strategies?  Additionally, there are various risks related to home equity, not simply related to its investment qualities.  It is not "safe" as people are led to believe.  Read this post for an idea regarding that issue.

Also, there are no guarantees in life.  The goal is to minimize risk and there are numerous ways to do that, without "gambling" your money away.  I also do not recommend any strategy that "consumes" money, such as the "buy now, pay for it later" style you mentioned. 

The purpose of this post and discussion is that Money Merge Accounts, while being good for some, are not the "magic pill" they are being sold as and they may actually end up costing most families more money (or reduced wealth) in the long run.  It is to make people realize they cannot rely on single minded approaches or single product approaches alone and should seek someone who has a wide variety of solutions to assist their unique situation. 

United First Financial and the vast majority of its reps cannot do that.  Most mortgage professionals do not do that either, which is why people need to do their research and chose one they feel will have their best interests in mind when finding their solution.

Thanks for the discussion.

Jeff...Despite your feelings, I am not evading the "costs" involved question.  The answer truly depends on the individual client.  There are a wide variety of strategies they can implement and, as such, the costs related to each varies as dramatically.  To state an average over a lifetime is very difficult to determine due to these factors and would not be a very accurate number.

The only question I would have in relation to your question is, does it really matter?  I mean, if someone spends $3,500 on a web based software that might save them $100,000, why wouldn't they spend more to create more wealth over time?  I said might intentionally as many of the users of the program can save almost as much by using the ALOC/HELOC the same way if they understand the principles and spend about the same amount of time as if they used the program itself.

Heidi...For starters, this scenario was just one couple and does not reflect anyone else's unique situation.  But, before you go and defend UFF's software and program, I think your numbers may be incorrect as you are not doing an accurate comparison.  That being said, without knowing your exact situation, I cannot, nor will not, state which way you would be better off. 

Everyone is different and, thus, the best soltuion for everyone is different.  I would only suggest you have a certified mortgage planner review your situation, compare the MMA and other strategies that "suit" you, and see which one truly is best.

I would be happy to run the numbers for you if I can actually find some spare time. 

Casey,

The MMA program calculates the income versus expenses, so it inherently calculates all "non-expensed income" into its projections and basically all normally discretionary income is used to pay off the mortgage as fast as possible.  This is the only way you can pay off a mortgage in as little as 7 years.

That being said, as in the post, the MMA is most likely the fastest way to pay off your mortgage, however it may not be the best for you regarding overall wealth accrual.  That is where all strategies need to be evaluated based solely on the individual/family's unique situation, including suitability factors and a full understanding of all concepts.

Failure to look at all options or not be properly educated will most likely lead to the solution chosen being more costly in the long run.  That is the bottom line.

Casey,

I can see that you are missing the point, or at least part of it.  While the MMA does effectively provide interest cancellation, that may not be a good thing.  Paying interest is not necessarily a bad thing.  Think of it this way...

The interest you pay is an employment cost, while the money you will not make in investments is opportunity cost.  Would you be willing to have a low "employment cost" to avoid having a large "opportunity cost"?  That is part of what mortgage planning is about.  Trading low costs to reap greater rewards, just as the banks do it.  It is called arbitrage.  Mortgage planning actually seeks to provide safety first, liquidity second, and then increased rate of return.

One part you did get correct is the advantage of compound interest over stratight line interest, but you are somewhat backwards in your thought process.  Mortgages are straight line interest, not compounded while investments are compounded.

With the MMA program, yes you can invest, but it diminishes the purpose of the MMA program overall as the MMA's advertisement of paying off your mortgage years faster is based on using discretionary income to "cancel interest"and provide strategic extra payments. 

That is how you can pay off your mortgage in as little as 7 years and why, using myself as an example, it doesn't work at all since it shows me taking over 23 years to have it paid off, but with my mortgage plan, I will be in a position to pay off that mortgage in about 13 years, over 10 years sooner. 

This post was done because this client was the best candidate I have ever seen for a MMA program, yet when it came down to their choices, they had two options.  Option 1 was to pay off their mortgage as fast as possible using the MMA.  Option 2 was to create more wealth over time, increase safety, liquidity and rate of return (marginally) and only delay their "ability" to pay off their mortgage by 1 1/2 years.  Not a bad trade off.  Everyone is different as their situation is different, their goals are different, and their educational level is different. 

A true mortgage professional will adjust a plan to handle all factors and provide the best possible solution.

Thanks for the continued discussion.

Casey,

I offer the MMA type programs, so I don't really care if it changes the way Americans do mortgages or not.  Also, as I have stated, it is a good product if your ultimate goal is to pay your home off as fast as possible, and that is your sole focus. 

Most Americans do not understand the "new" rules of money as they are not taught in schools.  Typically, everyone does things the same way as their parents did or how they were taught, so most "cling"to Great Depression era thinking.  While it was good advice years ago, things change and people need to adapt to that change, including their thoughts about financial concepts.

Paying off one's mortgage, while a noble goal, prevents one from earning money elsewhere and achieving other goals.  Focusing on paying one's mortgage off will leave them in a less safe, certainly less liquid state of finances and prevents them from taking advantage of opportunities now that can cost them dearly over time.

I don't compete with MMAs because their goal is one thing...pay off your mortgage.  My business model revolves around do what "fits" the client, especially after they know the concepts and the "current rules" of money.  Some still opt to go with their comfort level and pay off their mortgage as quickly as possible, and that is fine.  More often than not, though, my clients have opted to better manage their debt and equity to make their mortgage work for them and do not see a need to ever pay it off, or at least wait until their other financial goals and dreams have been obtained.

Casey,

In another post, I highlighted how easy it is to make money using your mortgage to create arbitrage.  You hardly need to be financially savvy to do it. 

Home Equity is not a liquid and you must qualify for a new loan or even an extension of credit, which requires a job and a home in livable condition.  If you are in a crisis mode, at least one of those conditions will not be met and it will be nearly impossible, and certainly not cost effective, to obtain financing at that time.

HELOCs/ALOCs do provide some liquidity, but are limited to their amounts.  They are also subject to interest rate risk, which in our current market may not be a good thing since the Fed is saying inflation is not controlled yet, meaning rates may still go up.  Why not take your equity out now, while you can and with rates very low, and put them into safe investments.  Doesn't that make sense.

Also, Home Equity is risky.  As I mentioned earlier, catastrophies can wipe out equity in a heartbeat.  Take a look at the families mentioned in Do You Know What Day Tomorrow Is?  and see what I mean.  They lost hundreds of thousands of dollars in the hurricanes two years ago.  Additionally, since home values are based in market forces, equity can be lost, but never truly receive a rate of return.  What other investment can you think of that allows for loss of capital but provides no rate of return?

There is no such thing as ZERO RISK.  Also, everything is 100% financed.  If you pay cash for something, you give up the ability to earn money elsewhere or seize opportunities that arise.  By paying down debt, you are risking not being able to invest elsewhere.

The time value of money shows you that placing money into an account now will be far less expensive over time than waiting until the future to start investing.  That has been proven over and over again.  Why not prepare for your kids educational expenses, your retirement, and whatever else you want to plan now so that it will start accruing and cost less than if you paid off your mortgage and then started your investments?

Casey,

I do not think we can ever come to an agrrement on this topic, but you have not brought up some factors in the MMA.

The MMA's rate is a factor, despite interest cancellation.  The idea of using the HELOC/ALOC as a checking account assists in minimizing its effect.  However, remember that the balance is average daily balance, so every check written is essentially being financed at the account's rate and if one is to invest in a child's education fund, they are, in essence, financing that fund at a higher rate than if they took out a mortgage or simply didn't focus on paying off their current mortgage.  So, interest rate is a factor on these accounts, despite their benefit toward interest cancellation.

Also, you left out tornadoes, earthquakes, fires, floods and other catastrophes that can destroy a home and thus eliminate any equity a home has.  It is not just hurricanes.  The vast majority of Americans do not have the finances to live on during the time it would take to receive the funds from the insurance company and have the repairs completed, which can take years.  During that time, they would still be required to pay their monthly mortgage payments.

So yes, I can honestly say that my way is safer.  There are many investments that preserve capital while maintaining a modest growth rate, it does not all have to be in the stock market like you suggest.  Costs are minimal compared to rates of return in general, much like your argument that the rate on the HELOC does not matter either.

I am glad to see more competition coming about with these programs, and I am well aware of Harj Gill and the disassociation that came about, from what appears to be marital issues.

That being said, each one of these companies tends to use distorted and/or false information to sell there products, or at least a large portion of their agents.  Some have used the outrageous "effect rates" shown in a report by the Asher Institute.  This report is full of misleading information, but has enough truth in it to sway the savvy (much like the devil distorts the Bible-sorry for the harsh comparison). 

Others, including Harj Gill and the American Mortgage Educators lead you to believe that the tax deduction benefit is a myth.  While it does not benefit all, and certainly using their why spend a dollar to save 30 cents logic, it makes sense.  But they fail to further educate people on the realities of home equity as an unsound investment and how focusing on paying off your mortgage may be worse for you than actually using a mortgage as a financial tool to propel your overall financial plan forward.

The bottom line is that whoever seeks these programs (and they are good programs for some) needs to not really on the agents themselves but do extensive research before committing themselves to the program.  All options need to be analyzed and no one selling one soltion only can ever have their client's best interests at heart!

I started this post to show how other options may prove to be better, not to deny the benfits of the MMA, Speed Equity or other.  That being said, proper mortgage planning has the backing of the Federal Reserve through their report released from the Chicago Fed stating such.  I will be happy to send a copy of that "unbiased" report to anyone who requests it.  Just use the contact link up under my picture and I will send it to you as quickly as I can. 

Unfortunately, my experience with those selling these programs, and I think you can see it in their comments here, is they are afraid of the mortgage planning process possibly sterring their client's away.  Or maybe it is just that the mortgage planners will show the truth to their client's if they have been duped.

I know I am being harsh, but reality is sometimes harsh, and using misleading information for any reason to make money has to stop.  This includes mortgage professionals in all shapes and forms, including mortgage planners!!!

Oh, I forgot to mention that they feel the media doing a report on what they told the media warrants credibility. 

The Miami Herald as well as a NBC affiliate in Las Vegas did a report.  I read the Miami Herald report and sent an email to the author stating the article was OK, but it could have been better if she used a mortgage planning professional to show other options as well. 

I think the media is a great way to "spread the word", but readers, watchers, and listeners need to realize they are in business to sell space, so they will put whatever they feel will make the most money for them in that space. That is business.

Update....I did some more research on these and found that Jack Guttentag, a highly regarded mortgage expert, has written about these and I suggest you not only take my word for it, but read his report as well before committing yourself to these programs.  His report can be found here...

http://www.mtgprofessor.com/A%20-%20Early%20Payoff/the_good_fairy_of_rapid_mortgage_payoff_is_back.htm

The Mortgage Professor (how Mr. Guttentag is known) also started the Upfront Mortgage Brokers concept, of which I have been a member since day one in the mortgage industry.  Peruse his website to learn more about those or visit www.upfrontmortgagebrokers.org for more information.

Jimmy...Ric Edelman is one of the guys I believe has many things correct regarding the truths about mortgages and home equity.  I do not agree with him 100% though. 

I am a proponent of keeping a big long mortgage, so long as you do not put your home at risk in the process.  I also know that paying off your mortgage as fast as possible is the best strategy for some people, hence why I started this post. 

Actually using your mortgage as leverage will, more than likely, put you in a better financial position than focusing on paying off your mortgage as fast as possible.  It takes a few years to see the real effect, but the time value of money works for you instead of against you.

Additionally, by using the tax savings from your mortgage, it is relatiely easy to achieve a greater rate of return on your money than the "forced savings" of paying off your mortgage.  The issue is not really whether or not to pay off your mortgage, the issue is more about if you are going about it the right way.

Trapping equity in your home as a savings vehicle is not a smart thing to do. It minimizes your liquidity, and if you face a financial crisis could ultimately put you into foreclosure due to that lack of liquidity.  Home equity is not a very good investment and is not as "safe" as people may think.  There is a lot of risk out there.  Fires, floods, hurricanes, tornadoes, earthquakes, termites, and a host of other issues can destroy that equity quickly and you will not be able to get it back out if you have no job, your home is in disrepair, or you happened to destroy your credit.  So, when you need it most, it won't be accessible.

I could go on and on, but the simple truth is Ric Edelman mentions a lot of good reasons to keep the biggest, longest mortgage you can afford.  What you do with the money and how you manage it is the key.  Also, it is not for everyone, but the Federal Reserve, in a recent report, said that at least 37% of Americans would benefit from this type of advice.

Jimmy,

Using CMG, or any other HELOC setup, to do this could be beneficial, but does carry some issues.  The first is that the money you take out of the HELOC to place into your investments, regardless of which type they are, will be financed at the rate on the HELOC if not paid off immediately.  If you can pay it off quickly, then it may be OK to do this strategy.

Now, the other issue you have is in relation to tax deductibility.  I had witten about the restrictions on mortgage interest back in October last year, or you can visit my newer blog at www.floridamortgagedaily.com as I recently posted the main restrictions there.  You most likely will not want to pay down your mortgage as that will deplete your acquisition indebtedness and limit your equity management strategies.

That being said, one strategy you could use is to set up the HELOC, take money out to invest (not pay down the mortgage) and fund your investment (EIUL) on a regular basis.  Then you can use your discretionary income to pay off the HELOC quickly and start over. 

Basically, this allows several lump sums to be deposited in your investments while potentially minimizing your mortgage costs and allowing.  All the while, you can keep your acquisiton indebtedness the same, through an interest-only loan, thereby keeping your tax advantages in place as well.

I am going to do a blog on this strategy over the weekend as I am on a trip right now.

Bill...It depends on your situation, goals, etc.  Everyone is different.  The point is that not every mortgage professional is qualified nor willing to look at all of your options and without that advice, it could cost you thousands or more.  Keep in mind that most agents selling this product are only selling this product and are not trained to look at all options.  Likewise, most mortgage professionals are not trained in all strategies either. 

While either side can "fake it", the homowner needs to do their research and find a professional that can look at all options, has the knowledge and expertise to advise correctly, and is willing to put the client's best interests above their own.  Find that person and you can be assured the strategy you develop together will be the best for you.

Scott...Chances are there are better things to do with your money, but just as I answered Bill, it depends on you.  Anyone who tells you there is one strategy that is best for everyone is full of you know what.  This post is to show that point, and as the comments have went, it has.

Thank you for your additions.

Here is a new post showing a blended strategy allowing a good implementation of the MMA type product...

Equity Harvesting, Money Merge Accounts and the Benefits of Using Both

Thomas...There actually is a slight benefit of using the HELOC side due to its interest being calculated on an "average daily balance" versus monthly in arrears as regular mortgages are.  There are significant limitations on this strategy that is not mentioned by any proponent of this product. 

Every presentation I have seen has portrayed a "perfect" scenario that makes it appear much better than it is.  Also, many will state that it is the software thta creates the savings.  That is truly not the case, although the software will help by spoon feeding those who need just that.  The real savings is based on depositing discretionary income towards your mortgage, plain and simple.  Definitely not worth $3,500 (in my opinion), but there are cheaper alternatives.

What I find very interesting is that UFF agents tell you no refinancing is involved at that the cost is only $3,500.  What they leave out is the fact that if you do not have a HELOC with the "special features" in place, you will have to set one up.  Extra costs?  You bet, in one way or another.  There agents will even recruit off that saying you can earn a double commission because you can get paid on the HELOC as well.  You decide, but I started posting about these being OK, but more than likely not the best solution due to them not being fully honest nor using other startegies in comparison.

Update...(required due to unfounded character attacks)

Apparently, UFF agents and other advocates of this program feel the need to attack my character to try and discredit my opinion, again believing I am against the MMA type product, to which I am only against the BS associated with it. 

If you think I am not an expert on the subject or do not understand the product, so be it, you are entitled to your opinion.  However, read the post, and I mean read it.  In fact, read every post I did on the subject and formulate your own opinion.  Here they are and this comment will be added to each post for easier navigation....

Money Merge Accounts: Are They Really the Best Thing for You?
Money Merge Accounts Vs Equity Harvesting: Harvesting Wins by Over $1.5M
Equity Harvesting, Money Merge Accounts and the Benefits of Using Both (do not formulate an inaccurate opinion of me before reading this)  Also, a UFF agent and fellow AR member, Jason Leone said this in a comment on his own post (originally attacking me)...

"It seems Robert and I got off on the wrong foot and have been in direct communication vial e-mail.  Both of us had the same intentions in posting our blogs.  Robert felt that the people advocating the MMA were not showing both sides of the coin and I felt the same way about the equity harvesting post.  Robert and I are in agreement that their is no one strategy that is right for everyone.

I have edited my initial and quite frankly harsh response and would like to state that I am proud to call Robert a Colleague and fellow CMPS."

Money Merge Accounts: Are You Dealing With a Professional?
Does Your Competition Hate You?

 Ok, two other answers to questions about me others mentioned...

1.  I have an agenda, just like everyone else.  Only my agenda is like Jason came to realize.  I am about spreading the truth about these and how they are being marketed.  They are not a "magic pill" or even the best solution for most Americans.  The best solution depends on the homeowners unique situation and you need a mortgage professional that understands all options to assist in finding the best solution for you.

2.  The reason for cutting off the non-member comments is that spamming was getting out of hand.  Anyone who understands SEO understands that when you get to the top of the list on Google, comments simply trying to direct you to their site occur and do not provide value to the post anymore.  I mentioned this fact on at least one post before yet many of my attackers feel that I did it for other reasons.  Google my name in quotes ("Robert D. Ashby") and you can read their opinions about me.

Now, my character attacks can easily be seen as unfounded, especially when you look at what Jason Leone has to say about me.  So, again, formulate your own opinion, but understand who I am and what my character truly is by reading all of the posts on the subject and others of mine as well.  You will clearly see their opinions are faulty, or you may still agree, it is your choice.
 

Jimmy,

I suggest you go over and visit my personal blog site and you will see a better side by side comparison of strategies that is based on UFF's own presentation.  Click here for the Money Merge Account Series.

As for your point, that is exactly why I stress the need to seek a FULLY QUALIFIED expert that uses ALL strategies to find the best solution.  The person in this scenario only gave me limited information and I was unable to go through my full MEDS™ program with them to ensure they got the best solution, hence why I keep saying the best solution depends on your specific situation.

What I can say is that of everyone who has come to me asking for advice from this post or as actual clients has by a long shot, been better off following another strategy as I mentioned.  Almost always, the mortgage acceleration programs do not even allow for the quickest pay off times.  Additionally, even in this scenario, the client has more options and flexibility using equity management versus mortgage payoff.

Again, please visit my other website and follow the series as I am putting it together in order to understand the truth behind the various strategies and why these are likely not the "magic bullet" for you (or anyone).

Oh, and I don't discount the desire for the client to be completely debt free.  I do however educate them on what home equity is, what focusing on paying off the mortgage does, and why other strategies work better.  Paying off the mortgage is a noble goal, however, if it sacrifices the remaining parts of the overall financial and investment plans, its nobility is destructive.

Phil,

I am glad to see Guttentag is now in better understanding of how these types of programs, however that does not change anything I have said.  If you have read my posts across the realm of blogs I write for, you will see I am against one type of mortgage acceleration program (the Money Merge Account - MMA), but actually offer the use of these types of products and even recommend them in some straegies which I am at the forefront on, such as my equity harvesting and HELOC combo which I was the first to highlight.

What I have repeatedly stated is that these programs are rarely, if ever (I have never seen it outside of my posts) compared with other strategies that tend to be more beneficial for the vast majority of homeowners.  The rules of money dictate that truth.  Unfortunately, almost all who push these products, especially the MMA, fail to understand the rules of money to their fullest.

Now, every client's situation is unique, so their best solution is unique as well, derived from an analysis across the financial spectrum, not just a 1003 or application for expensive software.  What I advocate is educating borrower's on the strategies and concepts that span the spectrum.  WIthout that kind of knowledge, the "real" best solution will never present itself correctly.

Phil,

Thanks for posting that link as I was unaware of the conversion.  I am glad to see Guttentag is now in better understanding of how these types of programs, however that does not change anything I have said.  If you have read my posts across the realm of blogs I write for, you will see I am against one type of mortgage acceleration program (the Money Merge Account - MMA), but actually offer the use of these types of products and even recommend them in some straegies which I am at the forefront on, such as my equity harvesting and HELOC combo which I was the first to highlight.

What I have repeatedly stated is that these programs are rarely, if ever (I have never seen it outside of my posts) compared with other strategies that tend to be more beneficial for the vast majority of homeowners.  The rules of money dictate that truth.  Unfortunately, almost all who push these products, especially the MMA, fail to understand the rules of money to their fullest.

Now, every client's situation is unique, so their best solution is unique as well, derived from an analysis across the financial spectrum, not just a 1003 or application for expensive software.  What I advocate is educating borrower's on the strategies and concepts that span the spectrum.  Without that kind of knowledge, the "real" best solution will never presents itself correctly.

Rick -

Q1 and 2 -Never mix business money with personal finances as you can get into a lot of trouble that way. 

Q3 - I would recommend placing that money is a separate vehicle for a couple of reasons.  One is that you can not carry a "positve" balance on the HELOC, therefore placing the money into the HELOC will require spending it elsewhere.  If using the MMA program, it will suggest using it to payoff your mortgage and then the money is lost in essence.  There are other reasons, but those may not fit your situation.

Q4 - Again, a business question and should not be co-mingled with personal finances.

I can see you are thinking outside the box and that is good.  Can the MMA work for businesses that are utilizing the interest cancellation effect?  Quite possibly, yes.  But that is a different discussion altogether.  Businesses carry different thoughts and should not be intermixed with this discussion so as not to confuse the majority of readers.

Also, intermixing business funds with personal finances can bring a lot of trouble.  Besides ethics and other issues, the IRS may have a take on it as well in terms of interst cancellation being additional income derived from your business, etc.  Consult a tax advisor and others, but I wouldn't even go that route if I were in your shoes.

Jean, Jay and Steve - Thanks for joining in.

Steve,

It was a while ago that C posted the example, and I do not honestly remember if his question was answered.  I believe I was contacted by him and, as I have told others, asked to send me an email with his example and I would give my honest opinion.  The reason for taking it offline is due to personal questions I ask.  I go deep into their current financial state and their mindset, followed by education as needed or desired.

I have had hundreds of emails of people seeking this, and other mortgage acceleration products, contact me for my opinion based on their own unique situations.  I will also point out that these are people outside the state, so I cannot generate income from them.  Nevertheless, I can only recall that 2 or 3 were actually better served by these strategies and once I had discussed all of the concepts, most chose other strategies.  Some of their testimonials can be found here or on my other blog, www.flmortgagereport.com.  I will add more as I have time, or at least change them up once in a while.

I do not know if C went with the program or not in all honesty as I have not heard from him again.  Again, not recalling if we entered discussions offhand, I am guessing other options would have been proven more beneficial over time, should he haven chosen them.