I came across a company that says they can help you payoff your mortgage in 8-10years rather than 30 or even 15years.
You can do a quick search on youtube for:
MMA Accelerated Mortgage Pay-off
The advertisement I saw said you have to buy software that costs $3,500… but it was reported by NBC news to actually work and not be a scam.
Anyone have information on how this works?
Why do you need $3,500 software to pay off your mortgage faster? This isn’t brain surgery nor does it require a computer. I’ll give you the answer and you can keep the $3,500! If you want to pay off your mortgage faster, either pay more principal each month or pay more often.
Mike
I agree and I’m not saying the software performs magic, maybe it just keeps track of your pay-off and isn’t even necessary.
But if there’s any truth to it, as NBC news claims, it’d be good to understand the idea behind it. The guy in the video makes it seem as though he’s “using the bank’s own services to his advantage” to help him pay off the debt quicker.
Do a search on this forum, I think in the financing section, there is a long topic on this software. The general consensus was that it was a waste of money.
Mortgage interest is your best write-off and mortgages are your cheapest source of funds. Compare them to credit cards. Why would you want to pay it off?
Money merge account is a multi-level marketing rip off. You are paying for referal fees to up stream. The program is nothing more than a line of credit used like a checking account. Deposit your pay check and income into the account. Pay your bills out of the account. Every time you get $5K in available credit, send a payment to your mortgage company. The trick is to close low yield account and transfer the cash to the line of credit. The only difference between what I have said and the program is that I don’t provide the fancy software to do scenario analysis. You can do the same thing with excel. Roccy DeFrancesco has a book on the subject and is creating similar software that will cost less than $500.
NBC news makes no such endorsement. You talking about the Vegas station? They backed off from that.
Ask someone from UFF to give you a spreadsheet showing how they pay off BOTH loans faster and to zero in less time than you otherwise would. Using a HELOC will NOT help you pay anything off faster.
Go ahead…ask for the spreadsheet. Just don’t hold your breath.
Read the thread link provided above, this was a very long discussion and heated at times. As I recall under this program you take out a HELOC and payoff your existing mortgage. Then you pay every last available cent you have toward the HELOC which keeps the average daily balance down and over time you payoff your loan sooner. Since the HELOC is a line of credit you can pull some money back out of the property should you find yourself short of cash before payday. The $3,500 software was just a gimmick to help you track your progress and budget your funds.
I just read the entire link. I’d like to hear what everyone’s opinions are concerning this.
It sounds like the program is a slick way of saying that if you pay extra on your mortgage, you will pay it off earlier. DUH? Obviously, if you put every spare penny from your income on your mortgage, it will be paid off sooner. Do you need $3,500 software to tell you that?
Mike
In theory, a true money merge account can make sense. Basically, your first mortgage is a giant line of credit, and when you have cash on hand, you curtail the balance as much as possible, then readvance the funds. This could be great if you routinely have chunks of cash sitting in the bank doing nothing. Thing is, these accounts are not widely available, and when they are, there are usually terms that go along with them that take out some of the sizzle.
The UFF product is not a money merge account (they are not a bank), but they try to replicate the process by suggesting that you take out a HELOC, curtail your first mortgage with the HELOC proceeds, then use your cash flow in to curtail the HELOC to keep its balance as low as possible. You basically use the HELOC to live, applying all your income to it, then writing checks or using a Visa card against it to pay all your bills.
If you routinely have money sitting around doing nothing, but you can’t afford to just put it to your first without the chance of getting it back if and when you need it, this ploy can make a little sense. Usually not much, but in theory it can save you a few bucks.
Beyond that, however, I have not been able to see how the UFF program will deliver anything magical beyond what you could achieve with your own discipline. There’s nothing magical about using a HELOC, and of course if the HELOC rate is higher than your first mortgage, it can’t make much sense to pay off a lower-cost debt with a higher-rate cost of funds, although I am sure the banks would love you for it.
They always say stuff like how you’re sticking it to the bank by paying off a compound interest loan with a simple interest block of funds, and “WOW” isn’t that great? People seem to be in love with “getting even with the bank” and owning their home free and clear. As for me, I love the fact that I have over $400K in debt that is costing me 5.375% pre-tax. Do I wish that it were paid off? Sure, that’d be nice, I guess, but I am not going to speed up the process by foregoing other opportunities that make me a whole lot more money than 6% per year. When those opportunities are exhausted, or when they no longer fit my risk profile, I will consider repaying my mortgage faster.
I’ve poked a number of holes in the UFF marketing before, and I even went so far as to offer $1,000 to the charity of choice to any UFF affiliate who would send me a spreadsheet showing both loan balances at zero faster using their methods than my traditional prepayment plan. No one took me up on the offer, although I was sure called a lot of names.
The bottom line is that you don’t need a HELOC to repay your loan faster. True, you can use software to determine that the $1,000 TV you’re buying today will cost you $X in interest that you’re paying on your house by not curtailing your loan instead, but that software does not cost $3,500. I got my copy of Excel for much less.
A house with a paid off mortgage is like having money in the dirt. Get that money out there working for you.
I think there is merit in the concept. Paying off your 30 year mortgage in ten years saves you 20 years of mortgage payments – payments that can be redirected to income producing investments.
I don’t agree that you should spend $3500 for software to track your monthly payments. As near as I can tell, the UFF “software” is a web-based application, so, you don’t really get to download it to your computer. What are the chances that the web-site goes away if UFF goes out of business?
There is a lot cheaper downloadable, Excel-based software (under $500) that does the same thing as the UFF web-system. Additionally, with your own PC based application, you can take charge of your loans. You don’t really need to refinance your primary mortgage if you already have a great rate, and you don’t need an expensive flex-line account if you already have an equity credit line. If you get your own sofware application, you are in more control than you would be with the UFF system.
Just how I see it.
Pay off your primary mortgage, obtain rental properties with good lending terms and go forth from there.
The thing is, Dave, that you have to wait ten years before you can start putting those payments to work because until then all your money is going toward repaying the loan.
If you have an investment that can return a greater return than what you’re paying on your home loan, and assuming the risk is commensurate with that return, then why wait? Why not deploy that capital now?
I think if somone were really going to do this the right way, they would consider their own house an asset class and ensure that the correct percentage of their net worth was tied up in it. I could not see owning a $500,000 house free and clear if my net worth were only $500,000.
Your point about the Web-based subscription is spot on, however, in my opinion. If UFF really felt good about their long-term success, wouldn’t they rather get, say, $100 a month from each user for the next 8 to 10 years as opposed to $3,500 today? I know I would.
Why don’t they do this? My thinking is that they know people would wash out of the program when they don’t get the promised results or they find out that they can’t stick to the program (or worse yet, figure out how to do it on their own). Also, how on Earth are they going to pay all those juicy affiliate commissions when they are collecting only $100 per month?
In my view, this is exactly one of the reasons that they say you MUST HAVE A HELOC to use the program, which is nonsense: anyone can prepay a loan. You MUST HAVE A HELOC because you need a place from which you can get that $3,500 payment.
Why not take credit cards? Many people in the room may not have that kind of credit, or worse still…CHARGEBACKS.
All my opinion, of course.
Likewise I would think it would be foolish to have $500k in investment property equity and a completely mortgaged home. There definitely exists a sweet spot between the two.
Paul, I think you read more into my comments than was there. Nothing says you can’t continue investing while you are paying off your mortgage. If you are investing now, and still have discretionary income left over at the end of the month, that money can be directed to debt reduction on your primary residence. Paying your mortgage loan off in ten years does not preclude you from investing – especially if your investing uses the creative techniques that don’t require any money out of your pocket.
Mine don’t anymore. My investing has always followed a traditional rental property investment approach of buy with 80% financing (or less) and hold for production of income indefinitely. Today, My properties are self-sustaining. I refinance my properties to leverage equity to purchase more properties. Sometimes I use a 1031 exchange if the exchange will upgrade my portfolio, increase my cash flow, and increase my net worth. I don’t contribute my own money to support my investments, instead, I use new debt and the income from my investments to make more money to reinvest.
The point I was trying to make is that most of us have a 30 year mortgage on our homes. My monthly mortgage payment is $854 for just the principal and interest. I will have that mortgage payment for 30 years unless I pay off the note sooner (I am in my retirement home and have no intentions of moving). What if I paid off my home in ten years instead of 30 years, without increasing my monthly expenses? That is 240 monthly mortgage payments I won’t have to make – 240 payments total $204960. That is $204960 more money available for me to invest for 20 years that I would not have if I used those 20 years to make the mortgage payment on my primary residence.
If you have an investment that can return a greater return than what you're paying on your home loan, and assuming the risk is commensurate with that return, then why wait? Why not deploy that capital now?
As a general statement, I completely agree.
My mortgage rate is only 4.5% and logically I should direct discretionary income to other higher yielding investments. That I had been doing and have created a stock portfolio that yields around 10% in current income. My portfolio is well diversified with 30 securities and has a position value in the low six-figures. The portfolio income can be used to increase my positions or acquire additional securities. The stock market portfolio is self-supporting and creating new wealth every day without adding any additional capital out of my own pocket.
My epiphany came last year. In July 06, I had a triple bypass. I had no symptoms and no risk factors for heart disease other than being a male over 50 years of age, a little overweight, and not exercising. I went to the doctor for an unrelated problem and my wife tells the doctor that I had not had a physical in ten years. The doctor says, “We like to get a stress test for men your age,” and he scheduled it. Everyone was surprised that I flunked it, even the doctor.
While I was on the operating table for the bypass surgery, the doctors discovered an undiagnosed cancer. I finished the radiation and chemotherapy this past November. As a result of the cancer treatment, I had to be put on a feeding tube to assist nutrition. I came off the feeding tube this past April.
All of these life events were surprises, but they got me to thinking about my own mortality. If I were to die tomorrow, my personal income stops. My wife will have to use all of her monthly pension and social security income to make the mortgage payment and maintain the house. My wife is disabled and does not drive. All the income from the rental property and stock investments would be needed to replace me with a housekeeper, cook, chauffer, and a home health care nurse. If an unplanned expense came up, my wife would have to sell something. Everything that gets sold reduces the monthly cash flow available for her living expenses. How much simpler it would be if my wife owned the primary home free and clear and had all of her income available to meet her lifestyle needs.
Paul, I would consider myself financially independent. Nine years ago, at the age of 49, our net worth was well into seven figures, and we had enough unearned income to support our retirement lifestyle, so my wife and I both left the W2 world for the leisure of retirement. This did not mean that we quit investing either. As a matter of fact, with more time to devote to my investment “hobby” our net worth has doubled in the past nine years. My wife is not actively engaged in our investments, but instead leaves it all to me. My concern is that if I were to die after 2010, my wife’s cost of living would increase dramatically. I am only seeking to minimize the financial impact of my passing by giving my wife a free and clear primary residence.
If I can pay off my mortage in less than ten years without effectively increasing my monthly expenses, then I want to look closely at the program. If a $500 software application can help me do that, I will seriously consider the purchase.
Dave, you’re right on as usual.
The problem with this post as I see it is that most of the people disagreeing with the concept don’t fully understand it’s potential, most of what you’ve just laid out before them.
The concept works, plain and simple. The program (the $3500 version) is a gimmick, and quite frankly, I lost some ‘friends’ over it because they bought into it and I didn’t.
The HELOC is used as a safety net of sorts. If you need the money, it’s still there. If you’ve got $50K laying around doing nothing, then it makes sense to apply it to a loan balance. HOWEVER, it’s a little scary to do that AND not have a way to get to those funds if needed (refer to Dave T’s post above for example). If used correctly, the HELOC effective interest rate is about 2%, regardless of the actual rate. Now, if your primary rate is lower than that, don’t do it, but otherwise…
Everyone is also focusing on the primary home, because that’s what THEY (they being the promoters of the $3500 software) focus upon. They do that because the average person only has ONE home to worry about. Change the focus for an investor and the results can be HUGE!!
How about paying off a rental in 2-3 years? Using those new monthly funds to pay off the next one in the same time frame? Want to creat hassle free retirement? That’s the ticket boys and girls!
How about paying off high-interest credit cards, or car loans? It works.
Now, the real kicker (something that some people don’t seem to get) is that this does NOT create cash. You still have to have more coming in than going out. All this really does, in a nutshell, is take that “more” and put it to good use.
Raj