BiggerPockets

Has anyone come across the Money Merge Account (MMA), which is being marketed by United First Financial?
The idea is to use a HELOC to prepay your first mortgage by timing additional payments. It is supposed to be better than just paying additional principal by using the program to time additional payments. The company claims that the program is used extensively in Australia with great results. The concept certainly isn't new but the idea is the benefit of computerized timing. To me it just seems like a way to sell an expensive program that the average person will not follow. Am I missing something? I would love to hear from others who may know more about this program.

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If they are using Japanese or Australian funds you are subjected to currency risk. A change in the currency exchange rate would change the payment and the amount owed.

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Paying off your mortgage early is a piece of cake. You just have to have the discipline to designate part of your monthly budget as additional principle. Pay that much extra on your mortgage and viola. Early payoff.

If you're counting on dabbling in the " futures" market/currency trading to make your money that is a fool's game. IIRC from a finance class something like 90% or more of all options expire unexercised. Almose everyone who invests in futures loses money at it.

Why do you think you would be different?

all cash

Guys it does not have anything to do with foreign currency. This program was written by a guy from Cal Tech based on the ONE account in Europe and it works. I work for Carteret Mortgage one of the largest brokers in the Country and some of our top producers are personally using the program. You can search for dirt all you want on the company but you will not find it. The program is designed to cancel interest by putting all your incoming cash flow into the HELOC and paying all your bills from the HELOC. Since the HELOC is a daily balance account you are effectively borrowing some money for little or no interest. The program tells you when to move money and how much to the penny to give you the best interest cancellation. You can not copy these results on your own. It is the ultimate in leveraging the banks money. I was suspicious so I had a financial advisor friend look it over and verify the results. It IS the wave of the future. We all have the Amway mentality when we see something MLM but this flat out can change how you look at mortgages. Here is a link to a power point. I would be glad to discuss this with you after you watch it. Glenn Turney http://www.xmission.com/~u1st/mma100.html

Actually it doesn't. You we be prompted to pay a lump sum into your first mortgage on the first month probably between $2500 and $5000.00. On that first lump sum payment you will cancel out several thousands in interest. You are right some people will not stick to the program but it is extremely user friendly and anytime they take money out of the HELOC for other purposes they can take about 2 minutes enter it into the system and see the real affect it will have on their mortgage cancellation. The fact is that people go to financial planners and pay them money and don't follow their programs either. This tool is simple and even if they follow it half-heatedly they will more than recoup their $3500.00 and that money does not come out of their pocket it come out of the HELOC. Here is some info on the company, They were named outstanding company of the month by broker banker magazine. Follow the link. Glenn Turney
http://www.brokerbanker.com/page1.aspx

You make it sound like the $3500 disappears, it doesn't. If the home is sold after a few years the balance of the 1st mortgage and the HELOC gets paid. You also compare future savings with today's dollars, which is not accurate. . You also assume that the best use of money is paying off a mortgage. Paying off a mortgage is fine if you have no other debt. The mortgage is the last piece of debt that should be paid off. I was a Certified Financial Planner (CFP) for over 15 years. One of my frustrations with people was that they would never follow plans that were set up based on what they wanted, it's just human nature. It is always interesting when you use amortization schedules to show how much interest people pay over time, the value of the dollar that Washington threw into the Delaware would be enough to pay off the national debt if it had been invested wisely. I'm not saying that the program isn't good, for many people it could be. I'm just saying that a more sophisticated investor could find a much better use for the money than paying down a mortgage.

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Rehab702,

I think there are many good points here. However, the Money Merge Account is actually a program created for middle America, not simply the savvy investor.

This program actually helps the bulk of the country, by creating a vehicle which take care of the financial variables in the day to day living of people like myself, who only spend 2 minutes a month balancing a check book--then throw it in the sock drawer.

I know for a fact that you're correct, especially after talking to so many professional financial planners, that the #1 problem your profession has is getting the client to actually follow the plan.

Well, that's where this program is nothing short of amazing---because it becomes addictive. What I mean by that is--the instant visuals of how my financial decisions affect my mortgage have helped me to make better decisions, which speed up the payoff and keep me on track. That is not the exception to the rule, it's the majority of the clients on this program.

In fact, in the test market of nearly 400 Homeowners in CO, over 90% were ahead of schedule more than a year later.

That has to say something to the financial planner community...because they are climbing on board faster than you can blink.

On the flip side---this is a perfect program for those desiring to invest using their equity as well...because it can generate equity faster than by traditional means and provide more cash for higher yield investments.

So, if you think about it---this is a win-win, regardless of your position.

As for the price: $3500 was nothing when I saw it would shave 22 years and over $109,000 in interest off my mortgage. It was a no-brainer.

Hope that helps.

My thoughts exactly. The sales pitch confuses future dollars with present dollars to make the savings seem huge. You cannot compare the two without discounting the future dollars by an assumed rate of inflation. Just about anyone understands that a dollar was worth a lot more in 1960 than it is today in terms of purchasing power. The dollar coin that George Washington is alleged to have thrown across the Delaware would be worth over 3.6 billion dollars today if it had been invested and earned a 10% average annual return over the years.

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REI,

There is no need to pay the fee. An individual can accomplish the same using a HELOC and a 1st mortgage plus depositing all their income into the HELOC account.

You make assumptions here with a blanket statement like this.

I tell clients all the time they have the ability to do better that they ever would with a bi-weekly program, " if" they are willing and able to discipline themselves. That's the case with any program. This isn't about whether a situation will work if done on one's own---we know by principle and " math" that it can be done to a certain degree---the point is they simply won't.

The questions that have to be asked are 1) 'How much do you want to save, and do you want to maximize the use of every penny, as opposed to making a 'best guess'--because that's the actual comparison here. 2) WILL you do it on your own? ...because the resounding, proof-in-the-pudding answer to that one is 'no'.

The Money Merge Account is designed to keep all finance charges and the balance of the HELOC at a minimum at all times, according to the financial variables of a persons life. The advantage it has is: keeping people on track and educating them about their money as they make decisions in everyday life and instantly showing them how they affect their mortgage. It recalculates each and every time anything is spent. This is a real value, which we have established in the previous example with financial planners.

They [planners] make a plan--most people won't follow it. More than 90% of the clients DO follow the Money Merge Account and most find themselves 20%+ ahead of original calculations more than a year later. That alone is a substantial difference and benefit. That's serious results in this industry, no matter who's numbers you use.

Most people are not willing to do the calculations, and being human are also going to miss things. The average individual will not know what to send over to the primary mortgage, or when, to minimize the interest charges and maximize their savings--along with balancing out all their other debt (this program is about all debt, not just the mortgage).

Now, again, we are talking about two different classes here: the savvy investor and the average " Joe" homeowner (typical America) which would account for more than 90% of the ownership in this country. I'm sure the savvy investor can do many things and takes into account the rates of return far more than average " Joe" --but even then, if you're 'savvy', I would think you would want to maximize your profits (which the Money Merge would do over a calculator) and you also have more important things to do with your time (time is money and a calculator usage is money lost for most).

I don't deal with the savvy investor---I deal with the everyday homeowner who needs this program desperately. Yet, we have thousands of investor types getting this program, because it takes the hassle and worry out, while using it on multiple properties, on commercial properties and it moves from property to property. They own it for life. The $3500 never makes them blink, and the 'do it yourself' never comes up---that's a waste of their time.

Your statements, when applied to an average citizen simply won't stick.

Just look around America. We know the bi-weekly program works. It's tried, it's proven, we have the facts...and most people are aware of the program, but almost no one uses them. Why?

Because after a blanket statement like yours above, the truth translates to : They don't...so they won't...so they can't.

...and Rehab, how can you make the assumption that 'future dollars' is not savings, especially with people who simply will never get out of debt due to the refinance pain every 3-5 years we are trained to do now? The average homeowner will never realize any savings with this cycle.

That, and you will be very hard pressed to sway the minds of clients that shaving off 22 years is not a savings (that is 308 ACTUAL payments they will never have to make) in time, stress and of course the freedom to now do what they like with said equity.

Yes, I agree that there is always inflation, but you cannot predict that any more than I can. It's all speculation, whereas the freedom and peace of mind has it's own value. We simply make the calculations to what we know of todays dollars. That's all you can do. You cannot wipe that aside as invalid---that's a 'savings' the average person in this country is searching for.

I never said that future dollars are not savings. What I said was that the future dollars saved are compared to present dollars as part of the sales pitch. It makes the savings sound larger than they are. I do not dispute your point that this program can be of benefit to the average homeowner. I certainly do not advocate refinancing every few years because someone was stupid enough to run up their credit cards for the second, third or fourth time. My whole point is that there are better ways to use your money if you are smart enough to do it. My own mortgage is at 4.95%, I would not want to pay that off because I have much better things to do with my money.

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