Rekna

I'm trying to follow the logic of what this article (http://bankingandmortgagesecrets.com/) says about using your credit cards to pay off your mortgage early and it doesn't make sense to me. In their example a woman makes $5000 a month and spends $4000 a month. They have her borrow her maximum amount on her credit cards to make a balloon payment on her mortgage and then they pay off the credit card with the $1000 of extra cash around each month. Her credit card has a higher rate than her mortgage. Wouldn't it be smarter for her to just pay that extra $1000 each month into her mortgage and not put the debt on her credit card where she pays a higher interest rate?

Am I missing something or is this article just bad advice?

NoSoup

Coming from a mortgage broker - that guy is an idiot. Don't get me wrong, paying any extra you can on a mortgage is a good idea, but borrowing at a higher interest rate - especially one that isn't tax deductible like a mortgage - is the most ridiculous idea I've ever heard.

Quick tip - paying an additonaly monthly payment a year will knock nearly 7 years off a 30 year loan...

__________________
I have an aura of reliability and good judgement.

Just in case you were wondering...

parched_son

Soup.... thanks for the insight. If you don't mind me probing (and since it's kind of on subject) could you explain par loans and how a borrower can get the best rates from a broker? Thanks man....

newtx

Thanks for the quick tip NoSoup. I had no idea 1 extra mortgage payment could make that much difference. I'm assuming those extra payments would be made in the early years of the loan. Since in the early years of a loan the interest is higher than the principal and in the latter years it reverses.

Xazy

Yes 1 extra payment a year takes off 7 years however most people do not live in their homes for nearly that long. Also most mortgages now have very low rates comparative to where they were overall in the past 30 years, so it still might not be worth it to end your mortgage early. My rate is 5% (actually under) and I will never make a single pre-payment unless it is at year 28 maybe, just no real point in it, financially.

A reasonable mortgage is very good for you if you are working for tax savings.

NoSoup

Sure thing.

If you're interested in reading a bit more, here are a couple of old threads of mine -

NoSoup's Guide to Buying a Property: The Basics
NoSoup's Guide to Obtaining and Maintaining Excellent Credit
Ask the Loan Officer

A loan that is sold at "Par" basically means that it's a loan where the lender is lending the same amount of money as the borrower recieves at a specific interest rate. I know that might be a bit confusing, but it's helpful to understand how a broker can be paid.

For instance, if you were to come to me and ask for a loan, I basically work with a variety of lenders to find you the best interest rate. Once I have established which lender will give us the best deal, I look at their pricing sheet. In essence, this sheet tells me at what interest rates they'll give allow me to chose, and the amount of yield spread included at each rate.

A simple example -

You want a $100,000 loan for a house.

I decide to work with "ABC Bank" - and the pricing is as follows

6.50% - 101%
6.25% - 100%
6.0% - 99%

(the rate sheets are generally a lot more complex than that, but for this example, that's what we'll use)

What those figures translate to is the amount of money the lender actually gives me vs. the rate that you get.

If you were to get a $100,000 loan at 6.5%, they would actually give me $101,000 - the extra $1,000 is mine to do with what I please - I can either keep it or potentially put it towards the clients closing costs.

A "Par" rate is a rate with no return at all - in this case, 6.25%. If I were to get you a $100,000 loan at 6.25%, the bank would give me (the broker) exactly that.

"Under Par" would be where I have the client pay in additional money in exchange for a lower rate. For instance, if you were to only borrow $99,000, you would have a rate of 6.00%. Over the long term, this will likely save you significantly more than $1,000 - providing, of course, that you continue to stay in the property and don't refinance. This is often also referred to as "Buying down the Interest Rate" and should be available from any broker near you.

As far as getting the best deal from a broker, there are two main things that will likely give you the best results. The first, and easiest, is competition. Work with two brokers - and let each of them know that you're potentially working with someone else. They'll likely continue to undercut each other until they are close to losing money themselves. The second, as unprofessional as it sounds, is to estabish a good relationship with your broker. They'll be likely to charge you less if they consider you a friend.

If you have any more questions, please let me know!

__________________
I have an aura of reliability and good judgement.

Just in case you were wondering...

Cynthetiq

thanks nosoup... interesting to know that there's this extra bit. I'm trying to buy an investment property now hopefully using the equity in one property to pay the downpayment of the new one.

we'll see just how the numbers work, right now it's a bit underwater about $150/mo, but with a little change here or there, maybe we can make it $50 positive.

__________________
I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not.

NoSoup

It's not necessarily just a little extra bit - the rate sheets can vary quite a bit anywhere from 90% - 108% Additonally, you can ask for a custom quote from the banks for pretty much anything - although, of course, there is a point where it's no longer in the best interest of the borrower to buy them down - a quick example would be getting a $100,000 loan at a rate of 1.00% - but it would probably cost $85,000 to buy it down that far...

Where is your next property going to be? If I remember correctly, your first one is in Vegas...

__________________
I have an aura of reliability and good judgement.

Just in case you were wondering...

Cynthetiq

Also in vegas, the asking prices are $200k and below for 3bdrm 2 bath about $100 sq/ft.

__________________
I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not.

mortgage007

You have not understood the concept. Go to "Growmyequitytoday.com" for a real good explaination of this concept. Here they use an equity line of credit instead of credt card but either will work. The idea is that you deposit your $5000 into the equity account each month and pay your bills including mortgage from the equity account. Becasue you are writing checks for $4000 and depositing $5000,. your equity account always has a very small average balance and allow paydown fast. When it get down to a certan amount, you then make large payments to the mortgage every 4 or 5 months. In some cases, your mortgage is paid in 5 or 6 years instead of 30 and you save hundreds of thousands of dollars. The site i gae will explain.

NoSoup

I understand the concept just fine - the problem is, I don't think the people selling this "system" have any idea how interest and mortgages work. In fact, they can't even convince the internet masses well enough to pay their hosting bills - both the original site linked in this thread and the one you mentioned are down.

Paying a higher interest rate vs a lower interest rate is always bad. Always.

__________________
I have an aura of reliability and good judgement.

Just in case you were wondering...

The_Jazz

I tried to think of something clever to say, but there's so little wiggle room here that I'll just have to stick with my opinion that this is blindingly obvious and that I fully expect to see this thread lie dormant for a few months until someone else comes along to try to site plug their crackpot theory/scam/outright theft in a way that makes me have to ban them. Well done, NoSoup.

__________________
"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin
"There ought to be limits to freedom." - George W. Bush
"We have met the enemy and he is us." - Pogo

mortgage007

The site "growyourequitytoday.com" is up and running. It is good explaination of the concept. Please understand that the interest rate on the equity line, even if it is sustantiall more than the first mortgage, has very little effect on the process becasue you are going to keep the balance down to a small daily balance. In the example they use, i.e. first mortgage $200000 a 6% 30 yr am and the equity line at 8.6% the loan gets paid in 10 years following the process. Obviously, if you have more disposable income after bills and expenses, it works better. It will work with as little as $50.00/month disposable income but would take longer to pay down first mortgage. The site is for United First Financial and the concept is called "Money Merge". They have the best program although there are others. Go to the site and review the 18 minute clip. Choose the center box. As a mortgage professional, you should see how this can benefit clients. It only works if you have more income than debt. I have been in the mortgage business for 30 years and am skeptical of almost all programs I have seen of any kind. This one has me sold and I am using it!. If you talk with people who ae doing this, you will find that nearly all of them are satisfied. Go Google and put in Money Merge. Read the blogs and see what they have to say. The only people who are critical of the program are those who have not studied the program. Most common response is dealing with the difference in rate between the first mortgage and the equity line when it actually makes almost no difference. You wil see in their example that the borrower paid only a little over $800 the first year anc cancelled out over $100,000 in interest and reduce the term by 7.7 years. After 10 years the loan was paid and borrower save over $330000 in interest.

Cynthetiq

Can you show this as an example on an amortization spreadsheet? I think that will be more effective in proving your point than some blog hype and informercial clips.

__________________
I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not.

mortgage007

It would take way to much time and effort to make spread sheets or a powerpoint presentation. I am not plugging anyone's site but if you spend the 18 minutes looking at the graphs and charts at the site mentioned in my post, you will clearly see what I am taling about. Please note that I am selling this to anyone. I am simply commenting that in 30 years of seeing a thousand scams, this one is actually for real and works. The basic principal is that it allows you to make periodic (every three or four months) payments of $1800 to $2700 dollars toward your first mortgage by ysing money that costs you nearly nothing compared to what you save. I was not convinced until I saw the charts and graphs which are well done.

Cynthetiq

seems like they are missing something like: "Results Not Typical" in the below disclaimer. I watched the 18 minute spot and am not convinced it works for most lifestyles. It may work for some, but again, it's a matter of discipline which many do not have.
I don't understand how the depositing of my monthly expenses and then disbursing it from the HELOC is more beneficial than just paying your expenses as you normally do, and doing these cash injections on a regular basis.

__________________
I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not.

mortgage007

Please go to the referenced clip and it will explain in detail and show on graphs. It took me a while to see it but when you do, it it is obvious. By depositing $5000 and payin out $4000, ou are paying down the line faster and actually reducing the line balance. after a rew months, even after paying all you bills, your line has gone fro, say $10,000 to $8000 allowing you to draw $2000 and pay it toward your first mortgage. I had to watch the clip several times before it was clear. By taking the cash from equity line it is not coming out of your pocket directly. The concept takes some studing but trust me, when you get it, bells go off!

Cynthetiq

I did get that. I did watch all 18 minutes of the clip. I have looked at the information and still have the same question.

Which is why I'm saying, why can't you just take the $1,000 each month, and 2nd month pay $2,000 to the principal and avoid the whole HELOC all together? The only advantage that I see initially is to take the HELOC initial bump large payment. Other than that, my first question is still the same.

It has to come out of your pocket directly at some point, it doesn't matter if it comes out of the left pocket, right pocket, rear pocket. Ultimately it comes from your income.

__________________
I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not.

mortgage007

If you notice they do take the large bump initially of $11,000 and then periodically take drawa of more than the thousand extra you are putting in. In fact all of the extra payments are in excess of $1000.

Cynthetiq

correct, that's what I've seen and understand.

So again, why go through a system, instead of just paying the $2,000 every so often? The advantage so far is that the HELOC gives you the initial bump to pay out without using any out of pocket.

__________________
I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not.

NoSoup

Although I didn't spend the time to review the 18 minute clip, I can say that for as long as I've been in the industry this "system" has been around.

Unless magical money is coming from somewhere, it's better long term simply to pay down your mortage with out of pocket money. Taking out a lump sum on a second mortgage nets you exactly nothing - well actually, that's not completely true. You'll still owe the same amount but you'll be paying a higher interest rate, so it actually nets you down.

For some, this "system" might work - but if it does, it's only because it causes the user of the system to discipine themselves and pay extra on their mortage however often the particular "system" requires.

You'd be better off paying directly out of pocket any extra you can as soon as you can. Over the course of the loan, it'll save* you more than any "system" involving the use of borrowing money at a higher interest rate.

*I say save, but in essentially your house is simply costing you closer to the amount you agreed to purchase it for. A minor difference, but in my opinion a very important one.
-----Added 11/8/2008 at 09 : 23 : 24-----
So here's the scoop - and the math to back it up.


***EDIT****

I watched the video, and the figures they use are ridiculous. There are so many problems with their calculations it's unbelieveable.

Case in point - the video assumes that both individual are paid on the 1st of the month, once a month (calculated from the average daily balance of their credit line)

Additionally, it also assumes that they spend exactly $0 of their discretionary income on anything non home related.

Even providing both of these insane assumptions are true, here's the math that shatters the "system."

So, here's what we assume -

For all scenarios, $5,000/month net income
$200,000 in debt (only mortgage debt)
"Household expenses" of $4,000
Discretionary Income of $1,000


Mortgage specifics -
$200,000 is at 6.0% fixed for 30 years

Home Equity Line of Credit is at 8.6% Variable - for the example, we'll say it's fixed, but know that it will more than likely substantially increase over the next 30 years - and the vast majority of HELOCs have an annual fee ranging from $75.00 - $200 a year.

Scenario 1 - you pay minimum amount on your mortage for 30 years

$200,000 Principal
$231,676 Interest

$431,676 Total Repayed

Scenario 2 -

You follow that garbage system on the website.

It doesn't specify what the average daily balance over the life of the loan for the HELOC is, so I'll utilize the specific interest payed over the life of the loan that it did state. Supposedly the system uses sophisticated algorithams to determine the optimal time to "balance" your account. Riiiiiight.

According to the video, you'll pay $71,000 in Interest that has accrued on both the Home Equity Line of Credit and 1st mortgage combined after following the system.

To summarize: Scenario 2

$200,000 Principal
$71,005 Interest

$271,005 Total Repaid.

Scenario 3: Real Life

The ultra mega secret system basically assumes that since you aren't using any of your $1000.00 discretionary pay, you're putting it towards your mortgage. I'll assume the same.

$200,000 Principal
$67,384.23 Interest

$267,384.23 Total Repaid (winner!)

So... to sum it up, if you're borrowing at a higher interest rate to pay off a lower interest rate with the goal of saving money long term, you're an idiot.

These are the most basic assumptions, with everything tipped towards having the maximum impact shown in "the system's" *savings*

Still, common sense prevails.

Of course, once you consider adding the complexities of using "the system" - like not getting both yours and your spouse's total monthly income directly deposited into your account the 1st of the month, or taking into account the actual cost they charge you for "the system" - or taking into account the fees associated with having a home equity line of credit - not just the annual fee, but the nearly certain increase of a variable rate, it simply would add to amount of money you net using common sense rather than "the system"

What blows my mind even further is that it suggests the use of a personal line of credit instead of a HELOC. Um... Personal line of credit interst rates are substantially higher than HELOC rates - and there is no tax deductibilty, like there is with a HELOC.

To all homeowners out there - there isn't a magic answer. Pay as much as you can towards your mortgage as often as you can, and it'll be paid down faster and you'll pay less in interest overall. Unless you're able to borrow some money at a lower interest rate (take into account tax considerations) it's a bad idea.

And no offense mortgage007, but I'm ashamed that you've been in the industry for 30 years and buy into this garbage.

Also, I just googled the price - wowzers! What a scam!

From http://www.thesimpledollar.com/2007/...ome-borrowers/

Not only are you charged ridiculous fee, you get to pay interest on it to "accelerate your payments"

__________________
I have an aura of reliability and good judgement.

Just in case you were wondering...

mortgage007

You do make some good points regarding spending of the discretionary income. However, this will work with as litle as $50 in discretionary income. It will just take longer. The only system that I have found that works is the one from United FIrst Financial. You should go to the frequently asked quetions and every point you make is answered. Discipline is a factor of course. To take your thinking to the extreme, why not just pay cash in the first place? Obviously it is because cash is not available. The expamle in the clip does take into account all debts and expenses. $4000 is what thiis example uses for all debts including mortgage. The interest paid over the ten years in this example for the equity line (it is an equity line not a personal line) is about $8400 but but you are depositing $1000 monthly extra. YOu have made so many incorrect assumptions in you prvious post. The system tells you to pay bills when they are due. You deposit your income as you received once per week, twice per month or however you are paid. It makes littel difference. YOu are still missing the interest rate concept of higher rate vs. lower rate on mortgage. Because you average balance is kept low, your actual interst paid on the line is very small. Even a high rate personal card will work alsmots as good. Also, the initial $3500 fee is not financed and no interst is paid on it.

You are so far off base in your understanding of the program. If you have seen the clip and still don't understand, then obviously this is not for you. Thank you for your responses. Would love to meet you if you are in the Palm Beach County area. Gotta go, I lucked out with jury duty this week and will be out of touch.
-----Added 12/8/2008 at 11 : 01 : 56-----
How can a higher interest line of credit help to pay off my lower interest first mortgage? Can you give me more information on the workings of this program?When repaying a mortgage, it's not the rate you pay that's most important. What matters most is the total amount of interest you pay over the term of your loan. With the Money Merge Account system you use your line of credit to reduce the balance owing on your primary mortgage, and you reposition your regular income and your unused “stagnant” money you normally leave sitting in your regular checking and/or savings account to reduce the balance owing on your line of credit. By repositioning your regular income and your unused “stagnant” money you normally leave sitting in your regular checking and/or savings account, you are able to keep your line of credit balance as low as possible, which can significantly reduce the interest that would normally be charged on the line of credit. This means more of your regular payment goes towards your principal balance each month, helping you repay your mortgage ahead of your standard mortgage schedule. The online software system and customer service provide helpful guidance as to the specific transfer amounts and timing that is needed to provide each individual homeowner with the best interest savings possible under this system. Optimum interest savings under this system is a delicate balance between your primary mortgage, your line of credit, your income, expenses, transfers, etc. If you transfer too much to your primary mortgage, it can cost you more interest on your line of credit. If you transfer too little, it can cost you "lost" interest savings on your primary mortgage. This system helps homeowners to reduce both the interest and time owing on their existing mortgage by strategically positioning their money where it can provide much more financial benefit than "sitting stagnant" in a standard checking or savings account. Also, unspent "stagnant" money left against the balance of the loan that homeowners would normally leave in their checking and/or savings account is now working for them 24 hours a day without requiring them to change their lifestyle. When you need money for expenses, you can access it through your line of credit. Intricate financial features and details programmed into the Money Merge Account software help to better educate the homeowner and assist in the greatest time and interest savings possible under this concept.What is the secret behind the Money Merge Account system?
-----Added 12/8/2008 at 11 : 05 : 42-----
Can I do this concept on my own?Absolutely. The simple answer is that anyone can attempt to do something similar on their own. The most accurate answer is that the Money Merge Account system is an advanced tool, specifically designed to take into account the financial variables of individual homeowners' lives and help produce some of the greatest interest savings possible. This complex, yet user-friendly system records and tracks all critical financial data: the individual homeowners' income and expenses; increases, decreases, and out-of-the-ordinary fluctuations in spending; and many other financial variables in their daily lives. The system helps to maximize interest savings with each and every penny and recalculates to maximum efficiency under this concept each and every day. It adapts and adjusts to real life situations instead of expecting homeowners to stick to a static plan.
-----Added 12/8/2008 at 11 : 06 : 43-----
Why am I applying for a line of credit, and how is it associated with my savings and checking accounts?The Money Merge Account Program uses the equity line of credit solely as a vehicle or a tool to drive the program. The system is coordinated through Web-based software created by United First Financial and works independently of the lender. The equity line of credit must have the capacity to operate as a primary checking account and be set up with an open-end interest calculation rather than a closed-end interest calculation. Combined with the Money Merge Account software and service, this creates a system in which the money in your line of credit account generates an interest cancellation on your primary mortgage, while the unused money that normally would be sitting "stagnant" in your checking and/or savings account generates an interest cancellation on your line of credit, until otherwise needed.
-----Added 12/8/2008 at 12 : 52 : 21-----
James Barnes


August 1st, 2008 at 10:22 am I am always amazed how people can comment on software they have not seen. I have been in the mortgage business for 25 years, know all of the tricks to paying off mortgages early, and have NEVER seen anything as good as the MMA. Noone here is addressing the fact that not only will your home be paid off in record time but ALL of your debts will paid off in record time and with having as little as $50 of descretionary income after all your dry cleaning, going out for dinner, etc. It does not require a line of credit or even a credit card, just a simple savings account.
Plug in an extra $50 a month in your mortgage payoff calculators and see that would only generate a couple years savings in payments. Plug in that in the MMA and save15 years and pay off your credit cards and car!
Before you make comments, please take the time to check out the software. I too was extremely skeptical being a mortgage professional for a quarter century and a mortgage software designer and reseller. The amount of code written to do all the necessary calculations to help people make the best decisions when their situation changes due to an illness, loss of job, or necessary purchase is staggering. Have an agent show you version 4 of the software. It is awesome, and the $3500 is for free upgrades and support until the loan is paid off and it is guaranteed to work or your money back according to their agents. No, I dont have the software and I am not an agent. My house was paid off when I did some real estate flips in the early 90’s. When I do move up to a larger home, I will be buying the software.
Ernst and Young just gave them the regional award for best fiancial software and they are up for the national award too. Personal Investor Magazine just gave them an award for the best new software.
A scam is something that you pay for that doesn’t work. Looking at all that is being said on the web about this product, the only thing I see is that they think it is expensive. Noone ever says it doesn’t work . Because it does…
-----Added 12/8/2008 at 12 : 57 : 19-----
There is a lot I could say about this. Frankly I’m both amused and dismayed at so many comments on the internet about a product that are written by people who know so little about it. So here I’ll just comment on the 5 points cited in the article above, “United First Financial and the Money Merge Accounts: Scam or Legit?
1. It assumes that your HELOC interest rate will be the same as your first mortgage interest rate - very unlikely. The bigger the HELOC rate, the less you save on that difference.
This is a complete misrepresentation of the how the system works. One, it is not true that the program assumes the interest rate will be the same as the first mortgage. Secondly, it is not necessarily unlikely that it will be the same or higher. Third, it makes very little difference what the HELOC interest rate is because the interest calculated on the HELOC is based on the average monthly balance which is a completely different application than for a traditional mortgage. So this statement reveals no real understanding of the product or its application.
2. It assumes a single monthly paycheck so it’s a plan that loses some of its power if you are paid irregularly or every two weeks.
This comment is ridiculous. It doesn’t assume this at all, and in fact the more frequently you are paid the better the system will work for you. But even if it did assume a single monthly paycheck, and you’re paid every two weeks or every week as I am, then all you would have to do is hold your money in another account and deposit it into your HELOC once a month.
3. One big flaw is that there is never discussion of HELOC fees. I’ve never opened a HELOC but I imagine it’s not free.
The truth comes out on this one. Of course if you’ve never opened a HELOC you don’t have any concept of their features. I have opened a HELOC and guess what, there are no fees whatsoever. So the “one big flaw” turns out not at all to be a flow because whether you can imagine it or not, it is free.
4. This plan requires that you don’t save at all for anything else. Since your entire paycheck goes towards the mortgage and you withdraw expenses, it penalizes you drawing on the HELOC for non-essentials. Why pay $100 towards a 6-7% mortgage and then borrow $100 from a 10% HELOC?
Again, this is a complete misunderstanding of how the system actually works. You actually DO save money, a lot of it, because you are working toward paying off your home mortgage at a greatly accelerated rate, thus saving tens of thousands of dollars in interest payments and future monthly obligations. And you’re not borrowing at a higher rate at all. So the question should be, why pay mortgage interest every month for many years when you can get out of debt much quicker by using a money merge account system?
Finally, as if all those weren’t enough, you have to pay $3,500 for a program to help you do this!?
Well first, all of those are fundamentally flawed assumptions, as I have indicated. Secondly, $3500 is a small price to pay for a system that will pay off your home mortgage quickly and deliver you from becoming one of the ever increasing victims foreclosure.
I am old enough to remember when the Individual Retirment Account (IRA) concept hit the financial market. For about ten years, up through the mid to late 1970s most financial experts said it was a flawed concept. Many called it an outright SCAM. I don’t think anyone is saying that about IRAs today. I’ll just conclude with a quote from Einstein. “The significant problemes we face cannot be solved at the same level of thinking we were at when we created them.” And Lord knows we have created a mortgage payment plan nightmare that is now resulting in tens of thousands of people facing foreclosure. Had they used an MMA system to begin with many of them would now own their homes free and clear.

Xazy

bankingandmortgagesecrets.com site is down, but it seems silly to me the way the numbers work out. You are borrowing more and still have to pay it back. Your best choice if you can pay that extra amount is just pay an extra payment to the principal and you will still pay it down the same speed, if not cheaper if it is a lower rate then the heloc.

NoSoup

mortgage007-did you read that post at all?

I took the assumptions based directly from that example that you keep referring to, I think I'm rather confused with what you are talking about.

I worked the math and inequivically proved that it's better simply to put your cash towards your mortgage vs use the system you keep going on and on about.

I can only assume that you are somehow compensated on how many suckers you get signed up for that program, or perhaps are partial owner.

Unfortunately it's folks that spout disinformation like you that give a lot of people in the mortgage industry a bad rap.

I'm not trying to say that the program doesn't work at all - it does. What I am saying, though, is that it is a significantly better decision to not sign up for your program and just pay extra money on your mortgage yourself. You'll pay significantly less in fees (like the $3500 that is charged for the system) interest, ect.


Regarding this statement - The system assumes (calculated from the average daily balance shown on the HELOC in the example) that all of your bills are paid on the 31st of each month and both your and your spouses full monthly income is deposited on the 1st of each month.

Perhaps it doesn't make much of a difference to you, but to the majority of folks the literally tens of thousands of dollars extra that they'll be paying in interest if applied to a more realistic situation (bi-weekly or bi-monthly pay, debt payments due throughout the month) The average daily balance would be significantly (read: likely 1/3-1/2) higher, probably costing an additional $12,000-$24,000 in interest over the course of the system that is negated by the unrealistic assumptions that the system doesn't explicitly disclose in it's example.

I think, my friend, that you are missing the concept between a higher interest rate and a lower interest rate.

__________________
I have an aura of reliability and good judgement.

Just in case you were wondering...

mortgage007

I can't argue with your aura of reliability and good judgement. ( don't you know when your being put on?)

Nice chatting with you. Go make some mortgages and some money.


Also please note that it is not the mortgage industry that is pitching this product. Most are Realtors or financial planners or neither.

Cynthetiq

question, what happens for emergencies? life is always emergencies and unforseens. This means you pay those into and out of the HELOC as well? then pay down at a different schedule?

__________________
I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not.

johncena

Hi this is johncena.I did get that. I did watch all 18 minutes of the clip. I have looked at the information and still have the same question.Which is why I'm saying, why can't you just take the $1,000 each month, and 2nd month pay $2,000 to the principal and avoid the whole HELOC all together? The only advantage that I see initially is to take the HELOC initial bump large payment. Other than that, my first question is still the same.

It has to come out of your pocket directly at some point, it doesn't matter if it comes out of the left pocket, right pocket, rear pocket. Ultimately it comes from your income.I am interested to know more about this.
===============================================
johncena

thingstodo

This guy is full of crap or he would take the time to produce the spreadsheet requested. He spent much longer writing words than it would have taken to write the spreadsheet. SMoke and mirrors, three-card Monte, whatever you want to call it, it is crap.

__________________
If you're wringing your hands you can't roll up your shirt sleeves.

Stangers have the best candy.