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.
I didn't read this whole thread. The UFF program and all of the others that purport to have magic pixy dust that will cure debt with sophisticated timing and other stuff are garbage.
The Mortgage Professor discusses UFF here:
The UFF Plan: Another Good Fairy of Rapid Payoff
For those that don't know about The Mortgage Professor...he is Professor Emeritus at Wharton and knows more about mortgages and mortgage products than most people on the planet. His article does a very good job of debunking the reported value of this program for any future readers of this thread.
Real estate investors shouldn't invest in preparing their mortgage without a discount anyway. It is generally a horrible use of cash.
I agree with everyone here that this concept is not worth $3,500. In fact, I read Haj Gill's book and he claims he invented the concept and even he says the expensive software isn't worth it. So let's aside the cost issue and not confuse it with measuring the concept. Let's say it costs nothing to implement it.
Further, let's also deal with the argument that the HELOC concept is just giving people a disciplined approach to making extra payments to the mortgage, which, for real estate investors is claimed to be a horrible use of cash. Again, is this a strawman argument by the opponents? What if it doesn't require MORE capital? In fact, the proponent's claim is that it does not. Then it does not use cash.
All I'm saying is if you're going to deal with this subject, then deal with it fairly and scientifically.
@Mike:
There are still real costs to this approach. You can draw on the HELOC to purchase what you need at any time supposedly, but consider this:
1. What happens if the lender decides they don't want to keep the line anymore? I know banks are all benevolent in the eyes of many, but how many real estate investors are sunk right now because THE BANKS are managing their affairs improperly and need to call the lines
2. How do you acquire new debt if you want to buy more real estate? If you are "using the cash" drawn down on the HELOC to prepay your mortgage you are not liquid and are not an attractive risk to new lenders. This is not discussed at all
3. The software may be great at timing things optimally, but that value center is drastically overstated as is mentioned in The Mortgage Professor's article. Small timing differences are not going to make a huge impact over the course of the loans. You can do the same thing on your own fairly easily...as has been stated. The heuristic approach won't be optimal, but it will certainly capture the bulk of the value the software does
Bryan:
1. What happens if the lender decides they don't want to keep the line anymore?
Answer: I assume this is a concern that there is RISK here that outweighs the benefit. But my understanding is that only one or months of income is used and then HELOC is paid down to zero gradually and the process repeats. So someone making 8k per month is extended 8k more on his HELOC than he otherwise would be. I guess we can all judge how risky this position is if the bank were to call the line.
2. How do you acquire new debt if you want to buy more real estate? If you are "using the cash" drawn down on the HELOC to prepay your mortgage you are not liquid and are not an attractive risk to new lenders.
Ans: I think this is addressed in Ans #1 above. Not a big deal. It's only one month pay max added to HELOC balance. Is that really going to make any difference to someone's success in real estate investing?
3. Small timing differences are not going to make a huge impact over the course of the loans.
Ans: That's where this whole thing stands or falls IMO. That's what I'm still wrestling with. What is the value of this approach in terms of mortgage payoff time ALL BY ITSELF, with no $3,500 cost to consider?
4. You can do the same thing on your own fairly easily.
Ans: I think we're in agreement here. Answer to #3 is key to me because there is some time and effort involved in setting this system up and managing it and that seems to me to be a cost that must be weighed against benefits received.
My personal opinion is that all of this HELOC daily interest manipulation business is a very poor use of your time. The time you spend managing all of this could be spent elsewhere more profitably.
If you really want to take advantage of daily movement in amortization you should look at "simple interest mortgages." This is really a misnomer because all mortgages are simple interest, but I didn't make the label. Additional proceeds will be credited on those loans as soon as you send the money in instead of waiting for the next month. I am not sure if they come with a premium rate, but I see no reason why they would unless they are considered non-conforming somehow.
A simple 30-year note where you pay a bit extra each month is fine if killing debt is your goal. It won't be optimal, but it also won't be a headache with red flags raised for future borrowing. Imagine explaining all of this to a new bank...that takes energy that is better spent elsewhere. Creativity and innovation always have a price.
Wow, way to revive a very old topic guys. I did appreciate the latest debate of weights and measures as it pertains to science, creativity, innovation, time, etc.
Well done.
I just had someone come into my office pitching me the Moneymaxaccount. Same thing repackaged 16 years later I guess. Same sales pitches. When I was looking into it I found this thread and honestly thought some of the responses were AI generated until I noticed the posts were from 16 years ago! Reading through it's very obvious they were engaging in fake account review BS. How many anonymous people came into this thread just saying "it actually works" without any details about how it works. Nobody can just put up some math and show how it works. They default to "well its complicated software so I couldn't possibly"...but you should be able to explain why you are saying what you are saying....shouldn't you? Math is math, if you present it to me I'll see it that it works...or it doesn't...hmmmm