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Bad Implementation: High Speed Mortgage Payoffs

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There’s a new mortgage technique that’s gaining popularity in the United States. This is the first I’ve heard of it, and I don’t like it, even though the technique supposedly allows people to pay off mortgages faster, saving interest expense (but losing investment opportunity and the reverse effect of inflation).

The premise users a home equity line of credit (HELOC) instead of a mortgage. Every time you get paid, your paycheck is deposited directly into the HELOC as if it were a checking account. From this account, you can pay your bills other regular expenses, again as if the HELOC were a checking account. Anything left over is automatically applied to building your equity in the house.

high speedThe plan works if you are sure that your expenses will never outpace your income. If they do, you draw on the line of credit, which has a variable interest rate unlike a fixed rate mortgage.

Paying off debt tied to your home is a great idea, but I don’t like the way this product is structured. It does force the borrower to pay the loan off faster, but only if they are earning more than they spend. Here’s another drawback, from the article on CNN:

“It’s an interesting concept,” he said, “but looking at the amortization is very complicated. It’s almost impossible to know if it works out for you. You can’t see how the actual borrower’s behavior affects it.”

I’d prefer not using this type of arrangement. It locks you in to using a home equity line of credit when you may not necessarily need one otherwise. Simply obtaining a mortgage that allows you to make extra payments would be the better option, simply because it affords the most flexibility.

High Speed Mortgage Payoff [CNN]
Image credit: jpctalbot

Updated January 16, 2010 and originally published August 2, 2007. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 24 comments }

avatar Craig

And I thought ARMs and interest only mortgages were bad… I wonder if this will hit the radio advertisement circuit soon. Anything that gives such easy access to credit will likely be overused.

avatar frank

I think these are pretty common in the UK

avatar Chris

I looked at this program too (my own opinion is in my blog). Near as I could tell based on the numbers they were giving, you’d save a heck of a lot more by just paying extra into a conventional loan rather than taking out a HELOC and doing all their tricks.

Didn’t like the fact that they did not once mention the risk involved in such a huge variable rate revolving loan.

avatar Trent Hamm

These are also known as money merge accounts.

avatar Lazy Man and Money

My feeling with this is the flexibility costs you too much (as Flexo mentioned). What happens if you need to replace a air conditioning unit or something like that. Suddenly you are taking out $2000 at 8+% interest. You would have better off investing the surplus and then using it to pay off the air conditioning unit as necessary.

Now if they’ll let you take your money back out for free, then you’ve got my attention.

avatar Patrick

I agree with Frank. I’ve had a friend in the UK who had one of these. He said they are fairly common.

avatar Phil

I think that this is a very interesting concept – but fails on a two major points.

1. A HELOC is typically going to have a significantly higher interest rate than a traditional first mortgage, even if the HELOC is placed in first lien position. So this plan will cost more in interest than simply maintaining a traditional first mortgage.

2. Paying down your mortgage with every cent of surplus cash is a bad idea! Liquidity is massively important. Emergency savings first, then max out retirement accounts, then and only then should you consider mortgage prepayments.

avatar Bill

Over the past few months I’ve heard more and more about these “money merge accounts” or MMA, especially the one offered by United First Financial (UFirst) for $3500. I finally was able to go to one of their “presentations” and hear it straight from the horse’s mouth.

Basically, they tell you how you can pay off your mortgage in 7 or 8 years and save $100,000 or more in interest by buying their program. What they gloss over really fast is that it all depends on applying ever last penny to the principal.

They also use deceptive tactics to make it look like you’re paying off you mortgage faster than you actually are (i.e. they emphasize the mortgage balance decreasing by $10,000 after one year, but don’t mention that you’ve got a $9,000 balance on the HELOC).

This UFirst is basically just another multi-level marketing scheme and with all the sleazy sales people just now getting onboard, we’re going to be hearing a lot more about this in the months and years ahead.

avatar Jay

Hello everyone….

It’s a shame that many don’t do their due diligence when it comes to a new product introduced on the market. There are a number of mortgage acceleration programs available on the market these days and most people, including what I’ve read in this blog, sadly lump them into the same category.

When I first learned about the concept, I was introduced to the Money Merge Account from United First Financial, I looked into all of the programs available on the market to see which preformed the best for our situation.
When I completed my research, we purchased the Money Merge Account.

We’re investors and we weren’t looking to pay off our mortgage, we were looking to build equity faster and re-leverage our money to buy more properties. This program is helping us to do this…and our HELOC balance doesn’t keep rising as many like to believe and it doesn’t take every penny of our surplus funds to pay down the principal balance either.

Yes….we are scheduled to pay off our 415K mortgage in 6 years and 7 months, and will save over 479k in mortgage interest. I would challenge anyone to run the numbers with any other product on the market..I have…and couldn’t achieve the same results.

Oh…..as for air conditioners…we just replaced our A/C system in one of our rental properties…at a cost of $7500. We paid for it with our Amex business card (air miles), then wrote a check from our HELOC and paid the Amex. The A/C will paid for in a couple months, any interest we paid is tax deductible and the time to pay off our home only increased by 2 months.

It never ceases to amaze me how judgemental people be….Who cares how a company takes their product to market? If it is a quality product that works, then buy it…if not…don’t.

I am not sure what industry Bill is in, but I am sure that whomever he works for makes a percentage from the work that he produces…..And most likely his bosses boss will get some type of compensation for the work his team produces.

Here’s a clip from Channel 3 new in Las Vegas that actually did their due diligence.

http://www.youtube.com/watch?v=P5ibPz5mIzE

Best of luck to you all…..

avatar Luke Landes ♦127,505 (Platinum)

Jay: Your comment was one of several comments defending this product. The others were caught by the spam software, but yours doesn’t sound like spam so I let it through. You do realize of course that you could have had a traditional mortgage and accelerated the payments yourself? Do you also realize that with ALL of your expenses being paid by the HELOC, everything you do will be charged interest? Yes, it’s tax deductible, but you still pay interest, as the tax deduction effectively reduces your interest rate, it doesn’t eliminate it. Do you also realize that you now have a variable interest rate, which means that at any time the bank can raise your interest rate, extending the length of your mortgage?

The product has worked for you so far. Check back with us seven years from now. You would have been better off with a traditional fixed-rate mortgage with your own accelerated payments.

Media reports from local television stations are often provided by the companies offering the products for filler when there isn’t other news… typical in the pharmaceutical industry, fairly new in the financial industry. In fact, considering a recent string of spam that sounded much like your comment, linking to YouTube (?) and some other “sources,” I wouldn’t be surprised if some company is trying to use this blog as some part of their marketing campaign, posting with fake names. Obviously, I can’t allow that. :-)

avatar Deloris

Flexo:

I just wanted to respond to your comments. I am a user of this type of product and I know that I can accelerate my mortgage payoff on my own. After I actually took an up close look at the product and did my research I found that this product does a lot more than I would ever do on my own. Could I so something similar on my own, probably, did I or would I, no.

Your comment of “Do you also realize that with ALL of your expenses being paid by the HELOC, everything you do will be charged interest?” This is innacurate. With the product that I use it determines the lowest possible balance on your Heloc while determining the balance for greatest interest reduction on your primary mortgage. Your income deposited against the balance on your Heloc eliminates almost all of the interesst that would regularly be charged on the Heloc.

Also, your comment of: “Do you also realize that you now have a variable interest rate, which means that at any time the bank can raise your interest rate, extending the length of your mortgage?” This is also inaccurate. The program that I use does not require you to refinance your existing mortgage. If you already have a low 5% first mortgage you can keep it. The program I use only works with a Heloc secondary to the existing primary mortgage. Because of this fact, if your interest rate rises on your Heloc from say 8% to 18% it only effects your payoff by about 2 – 3 months. This means that you could go from a 10 year payoff to about a 10.3 year payoff instead of 30 years.

You can erase these comments if you want, but I am a real user of this program. This is not an advertisement, I didn’t even mention the name of the product I am using. The information I have listed is fact based on using the product. Please leave this information up if you are intersted in a comment from someone who actually uses the product.

avatar Wyman

I am grateful that I can learn what others are saying about this mortgage reduction program, as it helps me increase my own understanding. This is not the place for me to correct the many errors that are contained in most of the comments so far. My only comment is that it is amazing how far down the wrong road people will go with just a surface skimming of a topic, and not do their homework or fair analysis of something that has been in existence (and working) for several years in other countries, is based on a simple princple- math – and is perfected and made more user friendly by good ol’ American ingenuity. It is disappointing to see so much negativity and “closed mindedness” in discussing a “no brainer” principle and topic. I don’t like criticizing other’s comments, and many of the questions and objections brought up are valid and can be answered, so I would hope that more people would take the time to always look for the real answer and benefit from what enlightenment they gain.

avatar Luke Landes ♦127,505 (Platinum)

Deloris: The product I am referring to is the product described in the CNN article — a replacement for a first mortgage… as in an option for the first phase of buying a house. Your product as you say is “secondary to the existing primary mortgage.” Right off the bat, you’re talking about something different than what I am talking about.

Perhaps they are both called “mortgage accelerators” but it’s clear from the CNN article and your descriptions that these are *not* the same products.

I also encourage potential customers or mortgage accelerators to do their due diligence — for some reason, these seems to be a lot of debate on this topic and a lot of misunderstanding across the board, in addition to strong marketing tactics. Even though it’s simple math and psychology.

Banks that offer this program aren’t doing it out of the goodness of their hearts for the customers’ benefit. If they weren’t making money — MORE money than they would be with a traditional first mortgage — then these products would NOT be marketed (with “news stories” on local television news stations and spam attacks on blogs) NOR would they even be offered. The customers targeted in these advertisements are the same people who are now finding it difficult to get “traditional” mortgages due to the sub-prime meltdown.

What if you want to put some of your paycheck into savings or investments assuming you have income to do so? Now you would have to *borrow* from your HELOC to do so. In many cases, long-term investing pays off better than accelerated mortgage payments, but with your entire paycheck going to your mortgage, this option becomes prohibitively expensive. As the benefits from paying off a mortgage early are guaranteed, I can’t fault anyone for wanting to take that path instead of investing… but using a line of credit for all expenses may help to pay off a mortgage early, but at the expense of the rest of your finances, *particularly* if for any one period your expenses outweigh your income.

As Wyman implied, do your own research… but try to ignore the pitches from marketers and the salesmen. In the worst case scenario, your mortgage is paid off earlier but you’re still tens of thousands of dollars — or more — in debt with the line of credit, and no savings or investments to show for it. In the best case scenario, it works, but you probably could have saved money by accelerating the payments on a fixed mortgage yourself.

By the way, I’ve done the research and the United First Financial Money Merge Account (mentioned above and in numerous spam messages already deleted) is a *Multi-level Marketing Scheme* (MLM) and is marketed through what is called “The Jubilee Project.” Though they claim to be independent, they have a stake in pushing this particular product. Stay far away from these people. Multi-level Marketing Schemes are dangerous and it is *impossible* to get unbiased information from those involved because everyone believes they have a stake in “converting” others. Several “Jubilee Consultants” have tried to post *spam* on Consumerism Commentary. I encourage anyone who is interested in these products to *stay away* from this group, and if you must use a HELOC combination to pay off your home, find a program where you can get unbiased opinions from existing customers.

Reading the Jubilee Project’s blog, which you can find on your own, this sounds more like a *religion* in which the object is to *convert non-believers,* not sales of a financial product. *BIG WARNING* This type of marketing connects with a big portion of consumers in this country, and I’m sure I’ll get nasty notes in response, but find another option than being involved in a movement where families rather than employees are courted to sell the product. It’s a horrible, manipulative marketing technique, but it has worked well for Tupperware, Mary Kay, Amway, Quixtar, etc.

Here is how the United First Financial “Money Merge Account” is sold via a Multi-Level Marketing Scheme, from an example website for an agent provided by The Jubilee Project:

Commissions start at $900 per sale as an ‘Associate’ and increase to $1575 per sale as a ‘Branch Manager.’ For each five sales you make, your profit increases until you reach Branch Manager. You can accomplish this completely solo, or hire and train a team of new Agents to work with you to increase the volume of sales. The choice is completely up to you. This Program has proven to be the perfect opportunity for Mortgage Brokers and Loan Officers, Insurance Salesmen, Real Estate Professionals…and especially previous clients on the program themselves.

When customers begin to have a financial stake in converting others and in having others sell for them, you’re treading on shaky ground and no one involved in the program can be trusted for unbiased opinions.

avatar clay

Flexo,

I agree with your recommendation of people doing their due diligence. I have done mine. Because of my research, I have an answer to your statement of: “What if you want to put some of your paycheck into savings or investments assuming you have income to do so? Now you would have to borrow from your HELOC to do so.”

As you have made some very strong statements against the company name of United First, I assume you are talking about their product in this statement. If you are, you need to know that many of the homeowners using their product actually use their product to pay down their mortgage, in addition to investing. If someone wants to invest, they simply do not deposit their investment money into their mortgage acceleration program, thus they do not have to borrow any money back to invest. This product is not intended as an alternative to investing. It is designed to work in conjunction. I personally know a lot of the homeowners using this product and they are very financially savvy. I personally know one of the heads at a major national bank that is using the product and he has used it to pay down his principal and also has a large investment portfolio.

I have found that the reason this subject is so scrutinized by “some” is because they make their commissions advising people to invest in multiple investments, and they feel that this type of product threatens their income. Nothing could be further from the truth. For those who can see it, this type of product opens doors for multiple advantageous financial products. It also makes borrowers better borrowers. It helps people to lower their debt instead of continually increasing it. That is one reason the banks like it, not because “Banks that offer this program aren’t doing it out of the goodness of their hearts” as you previously stated.

As Deloris said, this information is fact. If you choose to erase it, that is your option. I do not mean to be confrontational, but as Wyman stated “It is disappointing to see so much negativity and “closed mindedness� in discussing a “no brainer� principle and topic. I don’t like criticizing other’s comments, and many of the questions and objections brought up are valid and can be answered, so I would hope that more people would take the time to always look for the real answer and benefit from what enlightenment they gain.�

avatar Luke Landes ♦127,505 (Platinum)

Clay: You say, “If someone wants to invest, they simply do not deposit their investment money into their mortgage acceleration program, thus they do not have to borrow any money back to invest.” Whereas this particular program instructs people to deposit their entire paycheck into the program, there will be no funds available for investing, as most people use a portion of their paycheck to invest. I agree that money should be set aside for investing but the philosophy of this and some other HELOC-mortgage programs is that all money not expensed goes towards the HELOC-mortgage. This leads us to this question — if you’re NOT depositing your entire paycheck into the HELOC-mortgage, you are at least partly managing your own money — why bother paying several thousand dollars to enroll in the “program?”

I’m not sure where some of the program’s supporters are claiming that those who criticize the program are making commissions. I don’t make any commissions selling any products. It’s the Jubilee Project members who have a financial stake in “converting” others. I just try to help people make informed decisions.

I agree that programs like this “make borrowers better borrowers” for the reason that they simply tie all their money up with the banks and the holders of the HELOC-mortgage accounts. If you’re already a “better borrower,” you don’t need someone holding your hand to make your own accelerated mortgage payments. You don’t need to tie up your *entire paycheck* and force yourself to borrow from “yourself” (although the interest payments don’t go to yourself). Some people will benefit from hand-holding and forced paycheck depositing… but that comes at an expense when compared to self discipline, high-yield savings, healthy long-term investments, and a steady accelerated paydown of a *fixed-rate* mortgage.

avatar clay

Flexo,

You state that the program “instructs people to deposit their entire paycheck”.

Those who do not wish to put their money in “investments” can choose to deposit their entire income against their mortgage, but those who wish to invest are able to run scenarios in their software which shows them what their end payoff result would be on their mortgage depending on how much they would like to leave out of the program for investments.

To say that this program advises people not to invest simply goes against the true value of the product. If you take a closer look at the product, you will find that it is specifically geared to enable people to see what their results would be if they only want to payoff their mortgage or if they also want to leave money out for investments.

Also, investment advisors all over the country are now using this program to show their clients different options. Many of the investment advisors state that they love the program because it give their clients who would like to invest and payoff their home at the same time more options to do so.

I appreciate your comments. Thanks for your time.

avatar Fred

I have been in the loan business for a long time. I heard about this concept and was skeptical like most people. After extensive research, I realized that this concept is real. I made it my mission to help homeowners by educating them about how it works. I needed to become a rep for one of these companies, in order to offer a product for homeowners. I selected a company that I thought had by far the best software at a much more reasonable price. It is not the company mentioned in this blog. I do earn something from it, but I feel great knowing that I’m helping others in the process. Let me see if I can turn you around by going back to basics…

This concept is simple. First, I think it is well known that if you put any additional money toward your principal now, you will save a significant amount of interest due to the “Time Value of Money”…30 years of savings is a long time.

Next, you have your checking account. Obviously, this is used to deposit your income and pay your expenses. The interest the bank pays on this is small or none.

If you could put these 2 together, it would be great. Then, when you deposit your income, it would immediately be applied toward your mortgage, and you would begin to save time and interest, just like you made an extra payment. Later in the month, you pay your bills and your loan amount goes back up, but not as high as before (because you need to earn more than you spend for this program to work). The net effect is that you save a lot by applying your income directly to your mortgage right now (like making extra payments), and also by “floating” your expenses for say a few weeks before they’re due. Using money management and simple math, your money is working harder for you. It’s stagering how much interest you will save over time.

In the U.S., the only way to put these together is to use a HELOC as the tool. You simply use the HELOC like you now use your “checking” account. The HELOC is your emergency fund in case you have any unexpected expenses. In using a HELOC, you will pay some interest on the outstanding balance, but you save so much more in interest on your 1st mortgage. It’s like using other people’s money.

My reply to other comments in these posts…
1) Investment: This BECOMES your investment. If you can get a better guaranteed return with something else, this program isn’t for you.

2) United First: It’s expensive and it does feel like an MLM. This drives up the price. There is a cost to become a rep and many of them are untrained. That’s why I didn’t choose them.

3) The interest rate is higher on a HELOC but it is calculated differently than a 1st mortgage. Therefore, the actual cost of interest on a HELOC is much less than the actual dollars saved in putting it toward the 1st.

4) Some companies sell this by replacing your entire 1st with a HELOC. This is extremely risky and you pay the costs for the refi.

5) It was stated that the banks don’t offer this program “out of the goodness of their hearts”. You’re right, banks manage money in a smart way. But they’re not the ones offering this product. It’s offered by a handful of companies selling this program, like the one I chose to represent. The program teaches you to think smart like a bank…banks pay a low return to its depositors and then lend it out at higher rates. Homeowners pay some interest on their HELOC to save much more on their 1st mortgage, just like a bank!

avatar Len

I have a degree in finance and everyone is leaving out several key components here leading me to believe that either there is a lack of finance knowledge or just no desire to make a paradigm shift in their thinking.

The first is that mortgages use an amortization schedule with a fixed daily interest charge to calculate your interest and principal amounts to be allocated to your mortgage. Thus daily compound interest. Interest assessments do not stop unless you pay a full mortgage payment and then pay an additional payment to reduce the mortgage balance.

Secondly, the HELOC, if set up right, calculates interest on the average daily balance using a simple interest method meaning you are not paying interest on your interest charges.

So let’s use an example . . .

I have seen several people say “invest first and accelerate your mortgage second”. Using that premise. Let’s say I invest $10,000 in a stable sound investment earning 7.2% which is way high in today’s market for a no-risk investment. In 10 years, I will have $20,000 due to the rule of 72 which says that if you get 72 and divide it by an interest rate 7.2 for 7.2% your money will essentially double (the answer 72/7.2=10 or 10 years).

If I take the same $10,000 and pay it on my mortgage and use an accelerator program paying off my mortgage in 8 to 13 years, I will save over $20,000 in interest including the interest I pay on my HELOC. The system is essentially a coach showing you daily, weekly or monthly, how spending your money will effect how you can pay off your mortgage.

Which would you rather have $20,000 in 10 years or additional equity you can use much much earlier to compound your investment opportunitiesa and generate $30,000 to $100,000 in the same 10 years?

If this is such a “bad systematic attempt by mortgage companies to get your money” . . . why does the company not do mortgages? Secondly, why do we use credit cards and pay off the balance each month to avoid paying interest. IT’S A MATTER OF MATHEMATICS!!!

DO THE MATH. UNDERSTAND IT ALL FROM A MATHEMATICAL STANDPOINT OR DROP THE SUBJECT AS IT IS OBVIOUS THERE IS A LACK OF UNDERSTANDING AND KNOWLEDGE ON THE SUBJECT.

avatar Luke Landes ♦127,505 (Platinum)

Len: You’re making two big assumptions. First, that the option of investing or paying off the mortgage is available as a lump sum of $10,000 at the outset. That’s not usually the case — money in invested (or paid to the mortgage) over time, lowering your investment IRR. This may support your argument.

On the other hand, you say: “Which would you rather have $20,000 in 10 years or additional equity you can use much much earlier to compound your investment opportunitiesa and generate $30,000 to $100,000 in the same 10 years?”

The only way to “use” that equity is as a loan on the value of the property or to sell and realize the cash. If you sell, you no longer have a place to live, but if you take a loan, you just have more interest to pay. Paying 6% interest to earn 7.2% in equities doesn’t even beat inflation.

It has become clear that different companies offer different products with different features and fees.

The bottom line is that the customer should be *skeptical* and *perform due diligince* before signing up for any kind of “program,” *especially ones designed in a pyramid-shaped scheme* in which users are expected to become ambassadors and salesmen, and are *compensated for conversion of others.*

avatar Andy

My money merge account. A Mortgage, a savings account and a rewards credit card. That is all you need, if you have the desire to pay off your mortgage early.

Just pay all of your bills with the credit card. Keep all of your income in the savings account or high interest checking account. Than at the end of the month when your credit card bill comes due, pay it off and apply the rest to your mortgage principle.

You don’t need fancy software to tell you when to apply this and when to do that. I’ve ran the numbers based on a $100,000 mortgage and $5,000 in income and the difference is minimal at best. With a slight edge to using the card and savings account. Both assumed no credit card debt and $2200 – $3000 in monthly bills.

I’ve ran it without the use of a high interest savings account and a rewards card and used the optimal effect on the merge account and the best possible scenerio gives the money merge account a $1200 or so edge. Again that is at absolutely optimum results.

If you have to pay a fee or money up front, it will cost you money to use the system. That money when added to the original mortgage tilts heavily in favor of using a card and a savings account.

There are better ways to invest than paying off your money early, especially if you have a low fixed rate, but the satisfaction of being truely debt free has it’s advantages.

IMO, I would not use a money merge account. I don’t need a tool to force me to pay extra on my mortgage. If you have the discipline and you choose to do so, you can accelerate your mortgage just as easily as this program and it costs you nothing.

avatar Fred

Flexo, I understand your skeptism (I was too). You seem to be saying that this system isn’t good. The question I have for you is, Do you agree that this system works? Mathematics say it does and they don’t lie. Once we all agree that it works, then we should talk about the exceptions, alternatives and why this program isn’t for everybody. Any homeowner should at least look at the benefits this program can bring, in addition to exploring other options. I represent a company that is not an MLM and they sell a better program for under $2000. I’m spreading the word to help people first…if I receive earnings from it as well I’ll sleep just fine at night. You started this post, but I can tell by your comments that you don’t have the same understanding about the system that I have. The system does work. If one has other options to get a better ROI, fine. But for so many who don’t have money to invest, this is a great way to create a return. I’d like to see how you respond to a basic scenario where someone doesn’t have savings to invest and comes across this product. How would you advise them?

Andy, not everyone has a savings and certainly most do not have the discipline required. People can lose weight on their own but so many invest money to keep them motivated. The software tracks optimum results and gives homeowners motivation to stay disciplined. You’re right, you need a tool to accomplish accelerating your mortgage, but for those without savings, the Heloc works best. Even if you do have savings why not use a Heloc and put your savings toward reducing your mortgage even faster? You’ve put so much effort into your method, why not go the last mile and save the maximum amount possible? You see, you’re missing one important component with your method. If you want to reduce your mortgage as quickly as possible, you want to get all of your income applied to it as quickly and abundantly as you can. It’s the basic Time Value of Money concept. You’re talking about adding smaller amounts to your principal later (whatever is left over and the end of the month). Doing that, you missed an opportunity to receive the greatest impact on reducing principal by applying all of your income to it now! What you’re doing is very good, but I assure you that in using the software and following the program, your results will be even better and the software will more than cost justify itself. If you set up a Heloc and immediately pull $5000 from it to reduce your 1st, the impact of that over 30 years is huge, vs. adding a smaller amount that’s left over. Why not take advantage of using OPM? Sure it will cost you some in Heloc interest, but far less that the savings impact on your 1st. There is still an ROI.

FYI…the phrase Money Merge Account, was coined by that MLM company that many think is way too expensive.

avatar Luke Landes ♦127,505 (Platinum)

Fred: I see from your email and URL that you have a financial interest in generating leads for your particular product. So putting that aside, some of these products are good, some are not as good. Even the good products should not be used by individuals who would abuse the easy credit. It’s a slippery slope. The opportunities for saving money are good, but there are no blanket statements that can be made. This is why I wrote my original comments about one particular product that is a bad implementation of what could be a good concept. I’m all for taking advantage of OPM — as long as the OP aren’t taking advantage of me and my M at the same time.

No cash-equivalent emergency fund? Spending more than you’re earning? If you answer yes to either, these products are not for you. They are not for the basic financial support needed in life, but if you have the extra cash and you want to pay down your mortgage faster, then evaluate your options from *unbiased* sources — those with knowledge but no financial interest in your decision — and find something that works for you whether it’s a financial planner providing you with the calculations, doing the math yourself, or buying an expensive piece of software. And as always, *steer clear of any pyramid schemes* or customers-turned-evangelical-salesmen.

If you *don’t* have the discipline to save on your own, and you need the hand-holding that the software offers, then you never solve the *real* problem with anything but a temporary band-aid… and chances are you won’t succeed with the software without some sort of discipline, anyway.

avatar Fred

Hi Flexo. I’ve been clear from the onset that I do represent a company. I do have a financial interest in generating leads, but as you can see, I’ve not once tried to solicit. I view myself as an advocate, educator or as you mentioned, a financial planner (they do get paid for dispensing advice too). Prior to selling my product, I did my due diligence and became a believer, without receiving any compensation. It was then when I decided to spread the word. I agree with you about UFF. I don’t like their structure. If they were the only game in town I would have considered working with them just to get the word out. But I know much better after doing extensive research. My writings here have been and will continue to be limited to being informative, not selling my product. Knowing what I know, I’d be saying the same thing if I had nothing to sell.

You originally wrote about it being a bad idea to put your entire loan into a Heloc. I totally agree. It’s too risky.

In addressing a few of your comments on your last post in order…A blanket statement that can be made is that this system mathematically works. No one takes advantage of you. It’s you who takes advantage of OPM. The Heloc becomes your emergency fund. If you spend more than you earn the program mathematically does not work. There is no quick fix for that situation. You do not need extra cash to implement this program. That’s the beauty of it. Last and most important, most people don’t have the discipline. What the software does is so much more than tracking. It becomes a motivator. When you begin to see how much money and time you will save on this program, you will begin to scrutinize the way you spend money each month. It is the dangling carrot that drives you to cut your costs so that money can be used toward reducing your mortgage. It actually creates an environment of discipline for homeowners. I guarantee that those using this program know so much more about their financial position and the impact of their expenditures than ever before. What better way to educate people than to give them hundreds of thousands of reasons to learn?

It took me some time to get past my skeptisism. I feel that you’re almost there. Who knows, maybe you’ll end up helping me spread the word? To make this work, one should get a Heloc (as a 2nd only) to use as a tool. You use it just as you now use your checking account, so it doesn’t get out of control. The software keeps you on track and forces you to take a closer look at your budget than currently. It’s that simple. You can save hundreds of thousands. I’d gladly spend $2000 (which I finance through the Heloc) to accomplish this, assuming I don’t have savings or another vehicle to acheive a better ROI, wouldn’t you? Check out my site…I couldn’t be any more straightforward. I must admit, this is the most honest product I have ever marketed.

avatar Luke Landes ♦127,505 (Platinum)

Fred, we can go back and forth on this ad infinitum. You believe in your company, that’s great, and maybe your program is just peachy, but again, you can’t make a blanket statement about all systems out there. In your last comment you mentioned several aspects of this software than can be accomplished *completely free.*

First of all, when it comes to motivation, one person’s motivation is another’s demotivation. Secondly, if tracking finances is a motivator for someone, this can be accomplished for free with web based products or freeware software. Sure, people who look at their finances in any sort of software are more knowledgable about their financial position than those who don’t. That’s not unique to a certain mortgage payment planning software.

You make it sound like getting past skepticism should be a goal; it absolutely is not. The only way to learn about anything is to ask scrutinizing questions, not blindly go with what someone is trying to sell you. Everything you mentioned in the above post can be accomplished without paying $2,000 of hard-earned money, certainly not financed by debt when one cannot afford it. That is just plain bad advice. Not a good use of OPM.

I’m not going to discuss this with any salesmen any further. Comments here are closed.

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