The concept of creating your own equity in your home has been around since the 1990’s when the Australian Government arduously promoted the idea of paying down mortgages. They wanted the Australian people to be debt free which they assumed would make a stronger economy. The Macquarie Bank in Australia devised a loan that worked like a line of credit - the interest was charged on the actual balance. Thus as the loan was being paid down, interest payments were less every month. If the same payment was made, the balance was drastically reduced, thereby creating equity. Those on the program were paying the mortgages down in less than half the time.
United First Financial came up with an innovative software program for use in the US. They recruited NASA engineers to design a program that would comply with US banking rules. The result was the Money Merge Account (MMA) program that allows homeowners to use their current mortgages and to add a line of credit or their own savings account to facilitate accelerated pay down of principle, creating equity in the home. act as a conduit to support the interest cancellation, floating, and timing concept.
So how does the MMA help create equity? Well, it uses the concepts that banks have been using for hundreds of years….and quite successfully. Have you ever wondered why there are banks on all four corners of a major intersection? And line their walls and floors with marble? They use a few methods to increase their wealth: floating the interest, interest cancellation and timing. They use these concepts to build their wealth.
What a concept….why did it take so long to figure out how the masses could do the same? Using the time proven banking concepts, the MMA can help home owners pay off their mortgage in as little as one half to one third of the time, as illustrated in this chart.
I was talking with my friend Mary, who has been in the mortgage business for years and had heard about the MMA. She thought that the MMA was similar to the bi-weekly payment program which also pays down principle. But after reading several articles, she realized that the MMA was much more than a bi-weekly program and created equity much faster due to the banking strategies.
What further solidified Mary’s thoughts was a conversation with her title and escrow professional, who was in banking for 30 years and verified the banking concepts. Having a number of mortgages on investment properties, she realized that it was cheaper to keep her mortgages in place and use the MMA to create equity. This was an important discussion for Mary and her husband as these properties had been purchased to fund their retirement.
They purchased the MMA program, and almost immediately began paying attention to their spending habits. By asking the question,” Do we really need to buy this,” they were able to get a firmer grasp on their spending habits and begin to make adjustments.
Mary and her husband came to me with the idea of paying down the mortgages on all of their rental homes, as well as all of their credit card debt, which had accumulated to around 1 million dollars. Using their discretionary cash as planned to pay down the debt, they should have everything paid off in 11-14 years. What does this means to them? It will free up $6,000 a month that they can redirect to invest in their future.
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