Money Merge Account?
Real Estate Investor · Las Vegas, NV · Member since 2008 · 1k+ posts · 447 votes
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.
8)
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.
I have a One account in the UK.
I have see the presentation for a mortgage product that is in the US but backed by an Australian bank. They charged no fee for setting it up other than the costs of a new 1st like most any other 1st mortgage product.
There are multiple ways to get the job done.
The fee is a sales charge to cover the folks who are promoting the fee based solutions. Like most things in the marketplace there are some programs that have higher front loaded charges and there are programs that do not. The sales people focus on the commission. The savvy investors know how to avoid the inflated charges.
Questions?
The math is very simple. Almost anyone who invests in RE can figure it out with a calculator. The paying off the loan early by X years or the interest savings of Y comes entirely from having less debt outstanding. There is no magic. The feeling of magic is because people do not think about the cost of borrowing vs. the income they get on savings.
John Corey
PS. For anyone who needs a detailed explanation just post the questions. I will either answer in the forum if there is general interest or we can use email. Save your money and buy a better calculator if the math is difficult right now. I can show you how to run the numbers once you can use the calculator.
PPS. The biggest benefit to an investor is not the early pay down of the loan. If is the idea that a HELOC lets you do cash deals.
My understanding of is that the heloc is tied to a bank acct that sweeps most of the money against the principal, including when a person deposits their paycheck. when you need money, you just write a check and it goes against your heloc. By having them take all the available funds, it lowers your balance, which lowers your overall payback. They are touting them with Australian or Japanese funds which are priced lower than US.
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.
8)
That's part of the problem also.
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
I understand all about prepaying your mortgage and how to do it. The reason for my post was that there are a bunch of people here who are pushing these Money Merge Accounts. Their claim is that it is significantly better than just making extra payments. My feeling is that it is just a way to sell an expensive program that you don’t need. I was just looking for information (dirt) on this program because I am bumping into it everywhere. Apparently the company has structured some sort of mlm type compensation plan which is how they are attracting people. A lot of mortgage brokers are touting the program.
8)
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
Thanks for that info. Human nature being what it is says that the average person will not stick with the program. No matter how good it is it takes a while to recoup a $3,500 investment.
8)
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.
8)
First TC I am sorry it did not hold you attention I was personally fascinated. Second $3500.00 in my opinion is a small price to pay for the power of this program. Next. Rehab-In many cases the program allows them to pay off their debt with the Heloc the program takes into consideration all their debt and there are clients that it will kick back and say that it is not beneficial for them. This is not something that we are selling to any Joe who will fall for it, their is a critical analysis that is done for each client. Let's take the case of a client who decides to sell their house in two years. The extra payments that have been generated over that time have considerably increased the equity in the house over a normal situation. With each lump sum payment that is generated the client is paying more into principal with their regular payment. Now grant it the timing of the sale could decrease the benefits but the interest cancellation of depositing all your money into the HELOC still helps you come out ahead. Remember the program is asking them to leave discretionary income in the HELOC each month thereby decreasing its balance also. Then they can use the program on the next house they buy without additional charge.
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.
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.
I have a One account in the UK.
I have see the presentation for a mortgage product that is in the US but backed by an Australian bank. They charged no fee for setting it up other than the costs of a new 1st like most any other 1st mortgage product.
There are multiple ways to get the job done.
The fee is a sales charge to cover the folks who are promoting the fee based solutions. Like most things in the marketplace there are some programs that have higher front loaded charges and there are programs that do not. The sales people focus on the commission. The savvy investors know how to avoid the inflated charges.
Questions?
The math is very simple. Almost anyone who invests in RE can figure it out with a calculator. The paying off the loan early by X years or the interest savings of Y comes entirely from having less debt outstanding. There is no magic. The feeling of magic is because people do not think about the cost of borrowing vs. the income they get on savings.
John Corey
PS. For anyone who needs a detailed explanation just post the questions. I will either answer in the forum if there is general interest or we can use email. Save your money and buy a better calculator if the math is difficult right now. I can show you how to run the numbers once you can use the calculator.
PPS. The biggest benefit to an investor is not the early pay down of the loan. If is the idea that a HELOC lets you do cash deals.
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.
8)
Very well said.
Some of the time you will hear that compound interest is the 8th wonder of the world.
John Corey
REI,
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.
Jaime,
A simple HELOC where the person's pay check is deposited combined with an exist 1st will do what you are describing.
If the borrower is not willing to spend less than they make no program is going to pay off significantly early. It is all about keeping the loan balance lower than it would have otherwise been.
If the typical person did nothing all all other than take the fees some people want to charge them the borrower could trim the loan term significantly.
With a 30 year loan you only need to pay 1 extra month at the start of the life of the loan and you drop the term from 30 to 29 years.
If people are not savvy enough to know that they can save themselves a lot of money and someone else wants to charge a high fee to explain it all the power to the sales person.
The math does not change.
It appears that all you are saying is your fee is justified by the borrower's lack of focus.
If you really care about these people why not point them here, I will tell them what they need to do and they can apply the fee they did not pay towards reducing the debt?
John Corey
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.
8)
Thank you for clarifying your point.
It all comes down to specific goals for yourself and your family. Some people see their home as nothing more than a tool. To others, it's a home, and a place they want to keep and protect. Those factors always have to be taken into consideration, and you never know when a great financial opportunity will come buy with a great return, so I see your point.
Our main focus in my business is simply to show homeowners, who simply are not able to do what you personally do, to pay off their home--and then create wealth by buying a second home and using the equity from that to do what you do. This allows an average family to buy, say 2-5 homes in the same time it would take to purchase a single property in a traditional sense. They now have income, ongoing tax benefits, etc.
That way, home base is protected, regardless of the changes in market or currency or even an investment opportunity going south.
I respect your position, because those with larger funds always have more options to make more when it comes to opportunities.
There is a question, however:
Would that equally mean that an investment to create profit would fall under the same equation?
If so, how can we be sure the money generated [from an investment] is actually better than the interest canceled, when the funds in both situations come from the future? Where does a claim to make money differ from a claim to save?
Would that equally mean that an investment to create profit would fall under the same equation?
If so, how can we be sure the money generated [from an investment] is actually better than the interest canceled, when the funds in both situations come from the future? Where does a claim to make money differ from a claim to save?
Jamie,
Do you understand the math behind discounted cash flows and the future value of money when discounted by the inflation rate.
In many situations paying down debt is superior to investment opportunities. It has nothing to do with discounting cash flows or future value. It has all to do with the risks associated with an investment vs. the almost guaranteed returns from paying off the debt.
Note that when you do the math you do have to adjust for the tax treatment if you really want to be precise about all of this.
Coming back to the initial point. If someone has $3,500 they will be giving up a lot of almost guaranteed returns when they pay a fee to join the program. That same money paid on their mortgage will have a huge impact if you want to look at the total savings.
Compare apple to apples. How does the fee of your program compare to doing the same thing without the fee?
I take your point that some people need their hand held and that is really why you feel the fee is justified. In the case where someone does want to pay for help doing what they could do on their one then so be it. That is their choice. I just somehow wonder if the presentation covers the fact that they could do this on their own. I suspect the focus is on the lifetime interest savings which are reduced by the fee.
Bottom line?
1. People sometimes do not make the best decisions.
2. The math is the math. There is no magic to pre-paying a loan.
3. Compounding can work for you or against you. If you are growing your assets faster than the cost of funding it is on your side. Most people are buying a home and do not rationally look at the numbers.
John Corey
John,
The funny part about this is there are no apples to apples. There are unlimited variables which change form person to person. The comparison with and without the fee are substantial, again as I stated when dealing with variables which the lions share of homeowners simply cannot do this on their own (I disagree entirely with "some" people because if most could do it on their own, they'd be doing it.).
People will simply not follow a plan or a budget. They simply lie to themselves, and then make a new budget. Having a program (ANY program) then has considerable worth across the board if you can get people to do what a financial planner cannot: stick to the plan. So, what value can you place on that?
We can go back and forth on apples to apples, but John---you first have to display that people are able to play on that equal field, and they simply don't, so they can't. It's not a theory---it's a fact that an entire industry makes a specific fortune on: mortgage refinances.
If you want to call it hand-holding, that's fine---it has considerable value which far exceeds $3500, just from the saved time with professionals.
I agree with you that people need to be hand-held. Not some however---most. The savvy investor is not the rule, it's the exception.
Also John, I stated that the software takes care of the variables. People are going to miss those variables at times---and "life happens" more times than not. So tell me how the average individual is going to keep track of each and every penny to compare to a program that does it for you automatically, and has a guarantee in writing of the results?
The savings far outweigh the cost of $3500.
I know, I'm a client and I simply could not/would not do this on my own.
If you want to take a step back from this and look---the reality is both systems work. There is no smoke and mirrors on my side, nor on yours. It's just a matter of decision, and people have to find their definition of value. Someone under a mountain or lifetime of debt might not care for your system for wealth---they want peace of mind (I have many clients like this, especially elderly). On the other hand, people who are willing to take the risk might want the most 'bang for the buck' and don't mind basing their returns on the stability of society.
Both are valid. You simply have to choose your own road.
So for apples and apples to be compared, you have to measure the pickers.
John,
BTW, I do not understand the math behind discounted cash flows and the future value of money when discounted by the inflation rate. That was why I asked my previous question, so I appreciate your response on that point.
I didn't want to be rude by not addressing that.
To clarify, I work with a specific type of client, which happens to be a majority of each community I go into, who simply want better control of their finances. This program has had one of the most phenomenal success rates imaginable.
However, if I seem to be trodding on anything said, let me assure you and any readers that this is not the case. I simply have the consistent experience of homeowners wanting another solution to a problem they can't fix. I am focusing on canceling debt, building credit scores and opening opportunities for people like yourself to approach my clients, because they are now able to expand their fortunes with more security.
Most of what's being talked about now is generating wealth. Again, that's up to definition. I have 10 children, and no debt with that many kids would be considered "wealth" by many--certainly by me.
The original subject of this post was:
The answers are:
1. It is better than doing this on your own.
2. The company does not claim it is used extensively in Australia. They are clear that the principles and concepts came from there--but no where that the Money Merge Account is used there.
3. It's not just the timing--it's the lifetime support, the lifetime use, the simplicity of use and a guarantee of results. It maximizes the effectiveness of your money for the average homeowner that simply will not do what a savvy investor does. That's the lions share of America.
Great product, great results.
Would that equally mean that an investment to create profit would fall under the same equation?
If so, how can we be sure the money generated [from an investment] is actually better than the interest canceled, when the funds in both situations come from the future? Where does a claim to make money differ from a claim to save?
Any investment claim needs to be inflation adjusted to be legitimate and taxes need to be taken into account as well. But it is fairly easy to judge what is better if you are dealing with guaranteed rates of return, if you have a mortgage rate of 6% and a guaranteed rate of return of 6% the effect of prepaying is identical to paying into the investment. You pay tax on the 6% return but you lose the tax deduction of the 6% mortgage so that is a wash. So the point still is that if you can invest at a better rate than the interest rate on the mortgage you should do so instead of prepaying the loan. The other negative aspect of prepaying the mortgage is that in order to get the money back you need to refinance or use a HELOC, with a liquid investment you just make a withdrawal.
Prepaying a mortgage is more of a personal issue than an economic one, many people like the idea of being debt free. It used to be that someone would buy a house and work to pay it off by the time you retired. Now the age of instant gratification and easy refinancing has changed the game and not necessarily for the better. There are certainly a good number of people who would benefit from your program.
8)
Gentlemen,
I have read through your discussions and I am interested in learning more.
I attended a U First Financial seminar and was intrigued. I agree this may not be right for everyone but it may be the right approach for me - paying off my mortgage is a goal of mine. If I can do it on my own - with out the aide of the software, then I'm all for it. John, you made the offer to help those interested - well I'm interested. I'd like to know more about setting this up on my own and would appreciate your insights. Thanks!