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Author: billythegoat Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127810  
Subject: Money Merge Account, HELOC, scam? Date: 4/8/2007 10:45 PM
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Question for those in the know:
Is this stuff a scam?
www.u1stfinancial.net
It is some sort of multilevel marketing based in Utah where "agents" sell software called Money Merge Account. The software costs over $3000, and allegedly analyzes people's income streams, mortgages, and living expenses to set up a type of budget for them in which they can pay off their mortgages in minimal time.

They do this, as I understand, using an interest free Home Equity Line Of Credit. Supposedly the British have been using these techniques for years, and the only reason it hasn't caught on so well in America is that big banking is suppressing it, as they will ultimately be the ones who lose out.

To me, it sounds similar to putting down extra payments each month on a house. If you send in additional money each month (on top of your scheduled monthly loan repayment) and have it applied to the principle, then the loan can be paid off in considerably less time.

Maybe I'm missing something. Is this really that great? Is it real---can using this software really save all these thousands of dollars? Is it any better than just putting down some extra money each month?
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Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 103334 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 4/8/2007 11:18 PM
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Hi billythegoat,

Question for those in the know:
Is this stuff a scam?
www.u1stfinancial.net


COMPLETE scam, wrapped in a legit business.... I've written a significant piece on this, but I JUST got the "dinner bell" so this dog is on the run...

I'll post the lowdown on this tomorrow.

Cheers,
Dave Donhoff
Strategic Equity & Mortgage Planner

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Author: billythegoat Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 103335 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 4/8/2007 11:31 PM
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Looking forward to it!
I've been searching the web, and have found several forums where people pump or bash the model.
From what I can tell, the concept behind it is not much different than prepaying a loan. The difference is that they charge a few thousand dollars for some basic software, and that they exaggerate the differences in interest rates between home mortgages and all other products (cars, fridges).

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 103336 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 4/8/2007 11:47 PM
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Is this stuff a scam?
www.u1stfinancial.net
It is some sort of multilevel marketing based in Utah where "agents" sell software called Money Merge Account. The software costs over $3000, and allegedly analyzes people's income streams, mortgages, and living expenses to set up a type of budget for them in which they can pay off their mortgages in minimal time.

They do this, as I understand, using an interest free Home Equity Line Of Credit. Supposedly the British have been using these techniques for years, and the only reason it hasn't caught on so well in America is that big banking is suppressing it, as they will ultimately be the ones who lose out.

To me, it sounds similar to putting down extra payments each month on a house. If you send in additional money each month (on top of your scheduled monthly loan repayment) and have it applied to the principle, then the loan can be paid off in considerably less time.

Maybe I'm missing something. Is this really that great? Is it real---can using this software really save all these thousands of dollars? Is it any better than just putting down some extra money each month?


Well, having been a resident of Utah, and recognizing that it has been called the scam capital of the world, I suspect that the software itself is significantly overpriced and not worth the money.

The concept has been discussed before on this board, several years ago.....the theory is that you finance your home entirely with a HELOC that charges interest. (BTW, there isn't any such thing as an interest-free HELOC - at least not from a bank) Then you have your paycheck(s) and any other income deposited as paydowns to the HELOC. This will cut the interest owed on the HELOC down more, the longer you leave the money there. So on the last day possible, you pay your bills using draws from the HELOC, thereby minimizing the interest owed on the HELOC. Continue to do this, month after month, and the theory is that by running all of your income through the HELOC and minimizing the interest owed, you will pay off the HELOC faster.

You could do this without a software program without you to help, as long as you don't live in Texas. Texas has laws pertaining to draws on HELOCs (minimum of 4k each draw, no more than 80% indebtedness unless it's acquisition debt) that make this concept almost completely impractical in Texas.

Part of the problem is that HELOCs in the US are typically only written with a limited draw period - typically 5 or 10 years. Even with paying less interest, typically it will take longer than that to pay off the HELOC. Plus HELOCs are almost always variable rate, and at a higher rate than a traditional fixed rate first mortgage, which means that the interest paid on the HELOC is going to be higher than the interest paid on a traditional fixed rate mortgage to start out with.

Additionally, you are encouraged to put all of your savings into paying off the HELOC - the theory being that you can withdraw money from the HELOC for emergencies. But this leaves you in a position where all of your liquidity is tied up in your home equity. And what happens if your house burns down, or gets hit by a hurricane, or an earthquake, or any other disaster you can think of? The bank that holds the HELOC isn't going to let you draw anything else from the HELOC until the house is restored to the value prior to the disaster, which could be months, if not years - there are people in New Orleans and Mississippi who have not been able to start rebuilding their homes yet, and it's been 18 months since Katrina hit.

The mortgage market overseas is somewhat different than the US mortgage market - for instance, in the UK, there are no fixed rate mortgages. This and other differences probably make utilizing this type of program much easier in other countries.

AJ

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Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 103338 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 4/8/2007 11:50 PM
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I didn't look into this company specifically, but these basically boil down to putting all your checking money into home equity line of credit that is calculated at on a daily basis.

At best if you typically spend $4,000 on normal expenses each month, then the average balance in your checking might be $2,000. If you mortgage rate is 6%, then if everything works perfectly you might save 2,000*6%=$120 per year. Unfortunately just by random chance, there will be some days that you carry a balance on the home equity loan so your real savings will be less. This isn't worth the high fee.

There are other pitfalls as well, like what happens to you money if the company managing it goes bankrupt.

Greg


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Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 103355 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 4/9/2007 11:37 AM
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Analysis of Money Merge Account
Collaboration with TMF Members RFAtWork, and Dave Donhoff
April 3, 2007

Assuming a typical family having excess cash inflow every month after all expenses are paid (including the mortgage payment), there are 4 ways to allocate the extra money (these 4 ways are not mutually exclusive):
1. Spend it
2. Save it
3. Reduce debt
4. Invest it

Pros:
Spend Save Reduce Debt Invest

---------------------------------------------------------------------
Enjoyment of 1% to 2% annual Save on interest 10% to 12%
the purchase interest income expense (6% to 8%) investment income
---------------------------------------------------------------------
Build up reserve Speed up repayment Build up reserve
time
---------------------------------------------------------------------
Build up equity



Cons:
Spend Save Reduce Debt Invest

---------------------------------------------------------------------
Spent & gone Low rate of Equity locked up Higher risk
interest income in real estate
---------------------------------------------------------------------
No reserve Easy access may
build up lead to more spending

Money Merge Account Concept Summary:
The MMA concept is to use an equity line of credit as a checking account. Using software calculations to maximize the cash inflow and outflow into the LOC to the individual's advantage. The concept relies on the LOC for emergency spending. To free up equity, the program advises requesting periodic increases of the LOC limit from the lender.

Analysis:
The basic premise of the program is in moving the excess cash from regular savings account (which earns a low interest rate), and use it to pay down the mortgage faster (higher interest expense).

The “sophistication” of the program is to exploit the difference between how interest expenses are calculated in a “closed” mortgage & an “open” LOC. It also attempts to maximize the benefit to the individual by the timing of the inflow and outflow of cash.

Strength of the program:
a) For those who don't have much discipline of controlling their spending, there is a “forced” discipline by moving much of the excess cash to pay down the 1st mortgage. However, once a person has gotten used to the program, and if they are really not disciplined, they can always draw on the LOC for extra spending.

In fact, in the “old” system of using a regular savings account, when a person overspends their monthly income, it is much easier to spot. That's because their savings account balances will approach zero very often. A low balance may be enough of a warning for some folks. However, in the MMA program, when a person overspends, their LOC balances will increase. But as long as it is not approaching the upper limit of the LOC, the “warning” sign is not as glaring.

b) A second strength of the program is in its maximization of cash inflow and outflow. For most folks, who lazily leave excess cash in their regular savings account, this is helpful. The software program takes the guess work out, and it seems easy to use.

Shortcoming of the program:
a) While saving 6 to 7% on a 1st mortgage is better than earning 1 to 2% in a savings account, there are other investment vehicles that can “safely” earn more than 6 to 7%.

b) Most will not be able to save as much money as the MMA program shows, because most will not stay with their mortgages for 30 years. Therefore, the calculated saving is simply a “potential” saving.

c) Similar to deciding on paying points to lower one's interest rate, a breakeven analysis is needed. An estimated time (in years) of when the actual saving will pay for the MMA program cost is important. (I don't have enough details to perform a breakeven analysis, however, my “gut feel” is that it will take about 3 years to pay for the $2,000 to $3,500 MMA program cost.)

d) Speeding up the repayment of a mortgage transfers risk from the lender to the borrower. The real estate market will go up and down, no whether how much a borrower owes the lender.

e) Equity build up on the real estate is illiquid and may not be released as easily or as cheaply as assumed in the MMA presentation. Illiquid equity inside real estate will not help the borrowers from dealing with emergency cash needs.

f) The net effect of the program (assuming one will follow the program to the end) is:
• The MMA seller will get a share of the “savings.” In fact, the MMA seller is the first party to get paid in this program.
• The next affected party will be the 1st lender. On the surface, the 1st lender will make less interest income from the borrower. However, the lender will get its money back faster, so it can lend it out again to someone else. Keeping interest rate constant, lenders will make more money flipping the same $200,000 to different borrowers through out the 30 years than having the original borrower keep the 30-year schedule (ie loan origination fees, points, other bank fees, etc…).
o Other parties like the mortgage brokers, closing agents, title companies, appraisers, state taxing agencies, etc… all benefits from the trickling down of writing new loans.
• The LOC lender will get a share of “savings.” As long as there is a balance in the LOC, the lender will earn some money.
• After the first three parties above have been “paid,” then a little of the potential savings will start to flow toward the borrower.

Other potential “losers” in this program:
There are two potential losers in this program – the local savings bank & the impulse-buy sellers.
• Savings bank may lose out, because the “excess cash” is moved out to the LOC. Also, checking activities will be in the LOC, too. However, the same bank may very well be the one offering the 1st, 2nd, and/or the LOC.
• The impulse-buy type of seller may lose out, too. Potentially, there is less temptation to spend on impulse-buy items, because there is no “excess” cash any more. However, since the LOC is the “checking” account now, the potential to “overspend” is just as high, may be even higher!


Who is MMA for?
Those who are risk averse, and are self-aware that THEIR OWN cash management is the riskiest part of their family portfolio,

(The problem here is that those who are self-aware of their cash-management weakness are also most likely to cheat the program, from their admitted weaknesses. When they are strong enough NOT to cheat... then the MMA steals their future from them by eliminating the funds they are strong enough to use for growth and safety.)

HEREIN lies a conundrum;
The only folks who will benefit from accelerating their mortgage prepayment instead of investing... are also the people most likely to screw up the plan, and overpay in both interest and costs. Those who are least sophisticated are most likely to lose in this program.

The least sophisticated are ALSO the MMA Sales strategies premier targets. They are most frequently hugely loyal fans to certain radio/media financial gurus that 'preach' of the 'evils' of ALL debt, without distinction to relativity, taxes, and the effects of leverage (marrying debt to appreciating assets.) There are a LOT of salespeople exploiting these 'preachings' right now.

Final Analysis:
A) The MMA program can be built, financially, without paying for any software programs. All it takes is a 1st lien HELOC, which is available in every state, at virtually the identical final interest charges as the MMA programs. These HELOCs can be linked to checking accounts, and provided debit cards for expenditures... no software required, no memberships to buy... and payroll can be arranged to auto-deposit straight into the HELOC account so the money is never "seen" by the borrower. IN THEORY this would work beautifully... *IF* the least risks, and best returns, were in the retirement of the real estate leverage.

B) IN REALITY, real estate leverage ought to be the VERY LAST debt ever paid off... and is BEST paid off not at all, until it can be paid off in full all at once. This is because the debt itself protects the real estate from liquidity loss and litigious attack, and the cash from the leverage provides safety liquidity and family net worth growth funding. In simple, it is best to eliminate all NON-real estate debt as immediately as possible, and KEEP all real estate leverage at maximum levels, UNTIL such time that side investments have grown to the point where they could be liquidated to eliminate the mortgage all at once. (Even then it may be advisable to leave the shield of leverage in place... but the decision would be free to be made safely at that time.)

C) THOSE MOST IN NEED of eliminating even their real estate leverage... even before access to growth investments... THOSE are folks who are facing risks no matter what, from inside the family money management. IF THERE IS A BEST PLAN for these folks, it would be having a payroll-direct payment to a 30 yr Fixed Rate Mortgage, or shorter term if their payroll could support it. THE KEY IS ELIMINATING THEIR CONTROL AND FLEXIBILITY... even if that also eliminates or reduces their chance of financial growth, safety, and future security.






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Author: billythegoat Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 103386 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 4/9/2007 7:55 PM
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Dave, that's outstanding! Thanks much for the help.

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 103387 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 4/9/2007 8:03 PM
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The MMA program can be built, financially, without paying for any software programs. All it takes is a 1st lien HELOC, which is available in every state

Except Texas - yes, there is a 1st lien HELOC available, but if it's not the debt incurred to actually acquire the property, it is limited to, at most, 80% of the property value (if the lender wants to keep the right to foreclose, which most lenders do), and 50% in some cases. Plus, in Texas, draws on HELOCs have a minimum of $4000, which doesn't work so well when you are trying to make a car payment of $450, for instance.

AJ

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Author: shortUSD Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 103417 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 4/11/2007 9:33 AM
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i'd put the $3000 as a principle payment on the home, and forget the software

just pay as much as you can to pay off the home, why buy software to tell you that?

-USD

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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 103450 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 4/11/2007 7:37 PM
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aj485,

You wrote, Except Texas - yes, there is a 1st lien HELOC available, but if it's not the debt incurred to actually acquire the property, it is limited to, at most, 80% of the property value (if the lender wants to keep the right to foreclose, which most lenders do), and 50% in some cases. Plus, in Texas, draws on HELOCs have a minimum of $4000, which doesn't work so well when you are trying to make a car payment of $450, for instance.

Well ... You could probably get around all of that as well. [I thought a Texas HELOC was always limited to the lesser of 1) 50% of appraised value or 2) the amount such that total mortgage debt does not to exceed 80%, unless used for a new acquisition.]

To get around the Texas HELOC rules, you could keep your low-rate fixed mortgage in place. Then say twice a month (or once a week) you would draw $4,000 and pay your bills. Excess funds from the draw and all income would be paid to the HELOC as soon as possible. Once the HELOC balance falls below a threshold, you would apply a certain amount to pay down the first mortgage.

The problem with that strategy is that if you don't live below your means, you'll never pay down the HELOC or your first. Instead you'll keep building up a balance on your HELOC until you're capped out - something that would happen pretty quickly with the restrictions in Texas unless you already have a great deal of equity in your home.

So you could probably do something pretty similar in Texas. It would just be much more complicated and offer less benefit. In other words, it's probably just a bad idea, even if it is possible.

- Joel

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Author: jasljohns Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 108566 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 1/21/2008 7:19 PM
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I hope this is not taken as confrontational, but there are some major flaws in:

Analysis of Money Merge Account
Collaboration with TMF Members RFAtWork, and Dave Donhoff
April 3, 2007

See the following thread:

http://boards.fool.com/Message.asp?mid=26251760&bid=100000&sort=whole#26283483

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 108567 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 1/21/2008 7:33 PM
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I hope this is not taken as confrontational, but there are some major flaws in:

Analysis of Money Merge Account
Collaboration with TMF Members RFAtWork, and Dave Donhoff
April 3, 2007


It's probably more confrontational if you just say there are flaws without backing up your assertion so that your logic can be examined.

AJ

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Author: tnyj5 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 109239 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 2/22/2008 1:01 PM
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Hello everyone,

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Author: tnyj5 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 109243 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 2/22/2008 2:30 PM
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Hello Everyone, I have been very intrigued by all the responses to Mr. Billythegoat question. I have the same question too. I must be frank and honest with you all as I write this response. I am not a financial guru or as educated about finances as I would like to be or as intelligent as others on this forum. But as I see it, I am a hard working American as are you. Now lets keep it simple, I would think that most anyone would rather spend a few thousand dollars to improve your life significantly then spend half your lifetime trying to build the American Dream with a 15,30, or 45 year mortgage and-or in Japan a 99 year mortgage, by owning your propety(s) outright(free and clear). As our economy lowers deeper to recession status. All I see is Banks going up not closing there doors. I understand in life that what we do in the future can be risky but can you afford not to take the risk! For a small sum of money. Its significantly less then what you will have paid in your lifetime on your mortgage. I plan on living in my home for the remainder of my life so with that said I do not want all my hard earned money going to some CEO of a Bank who cares nothing for my well being or my families, and, he is living the life that I am trying to work for. On average most Americans only live in their homes for 5 yrs. then start the whole process over and also with the refi's you just started the whole journey over again. By getting a 30 year mortgage on my home. I will pay an excess of between 100-120% of the value of my or our(Bank and I's) home then as if I paid for it out right. But because I can not I am a slave to the lender. When you receive a fixed 6-8% rate mortgage you will only be paying the rate at the 30th year. In the meantime for the first 29 years ala:(amortization) you have just paid for someone else to live the life that you dreamed of and paid for the bank to purchase another property as you live in today, free and clear. I am wondering how many of you honestly have paid more on your mortgage on your own without a program? I have not and I am sure some of you have a couple of times or would if you had the extra money.  Most of us prefer to own our homes outright which is the American way without some one else taking it from me if an emergency comes up in my life or wanting me to pay each month on time. And it is only a scam if you do not stick with it!! When the bumps of life come the system will make the necessary adjustments to help you succeed. Also if you can get a HELOC loan now with a your mortgage. Then when you build up your equity sooner and need the money for any rainy days then borrow it again for the time being. Also most of us are not as disciplined with adding a litle more to our homes. I am on a biweekly plan and it will cut my 30yr by 7 years. The banks don't want any of you to do this of course because as Mr. Donhoff has said it will be a major financial cut in their profits.
Ok: with all my rant. Now I have not purchased this program as of yet. So I was just wondering the thoughts of others in the same boat I am in. And I am not looking for an arguement just respectable thoughts. The question I have is: do you want to be more secure by owning your home with your hard earned money (as we we are tying to work for in the end) or do you prefer the Banks making out with your money. The program only helps you with being more disciplined. You do not make any changes to your day to day living. The program only maximizes the use of your money! Also how much freedom would you have if you did not have to pay your monthly payment each month, hmmm I wonder! What would I do with that extra amount of money! Remember I believe it's only a scam if you do not use it. Ask the Australians or Brit's for that matter a lot of them own 2 to 3 homes by using this program. What do you have to lose? But your amortized mortgage interest!!! Just my opinion. I would appreciate hearing your thoughts. Thanks


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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 109245 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 2/22/2008 3:37 PM
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The "Preview Message" button is your friend, as are multiple paragraphs. Here is your post, reformatted:

Hello Everyone, I have been very intrigued by all the responses to Mr. Billythegoat question. I have the same question too. I must be frank and honest with you all as I write this response. I am not a financial guru or as educated about finances as I would like to be or as intelligent as others on this forum. But as I see it, I am a hard working American as are you. Now lets keep it simple, I would think that most anyone would rather spend a few thousand dollars to improve your life significantly then spend half your lifetime trying to build the American Dream with a 15,30, or 45 year mortgage and-or in Japan a 99 year mortgage, by owning your propety(s) outright(free and clear). As our economy lowers deeper to recession status. All I see is Banks going up not closing there doors. I understand in life that what we do in the future can be risky but can you afford not to take the risk! For a small sum of money. Its significantly less then what you will have paid in your lifetime on your mortgage. I plan on living in my home for the remainder of my life so with that said I do not want all my hard earned money going to some CEO of a Bank who cares nothing for my well being or my families, and, he is living the life that I am trying to work for. On average most Americans only live in their homes for 5 yrs. then start the whole process over and also with the refi's you just started the whole journey over again. By getting a 30 year mortgage on my home. I will pay an excess of between 100-120% of the value of my or our(Bank and I's) home then as if I paid for it out right. But because I can not I am a slave to the lender. When you receive a fixed 6-8% rate mortgage you will only be paying the rate at the 30th year. In the meantime for the first 29 years ala:(amortization) you have just paid for someone else to live the life that you dreamed of and paid for the bank to purchase another property as you live in today, free and clear. I am wondering how many of you honestly have paid more on your mortgage on your own without a program? I have not and I am sure some of you have a couple of times or would if you had the extra money. Most of us prefer to own our homes outright which is the American way without some one else taking it from me if an emergency comes up in my life or wanting me to pay each month on time. And it is only a scam if you do not stick with it!! When the bumps of life come the system will make the necessary adjustments to help you succeed. Also if you can get a HELOC loan now with a your mortgage. Then when you build up your equity sooner and need the money for any rainy days then borrow it again for the time being. Also most of us are not as disciplined with adding a litle more to our homes. I am on a biweekly plan and it will cut my 30yr by 7 years. The banks don't want any of you to do this of course because as Mr. Donhoff has said it will be a major financial cut in their profits.
Ok: with all my rant. Now I have not purchased this program as of yet. So I was just wondering the thoughts of others in the same boat I am in. And I am not looking for an arguement just respectable thoughts. The question I have is: do you want to be more secure by owning your home with your hard earned money (as we we are tying to work for in the end) or do you prefer the Banks making out with your money. The program only helps you with being more disciplined. You do not make any changes to your day to day living. The program only maximizes the use of your money! Also how much freedom would you have if you did not have to pay your monthly payment each month, hmmm I wonder! What would I do with that extra amount of money! Remember I believe it's only a scam if you do not use it. Ask the Australians or Brit's for that matter a lot of them own 2 to 3 homes by using this program. What do you have to lose? But your amortized mortgage interest!!! Just my opinion. I would appreciate hearing your thoughts. Thanks

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Author: tnyj5 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 109246 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 2/22/2008 3:39 PM
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Thank you. Sorry about that.

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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 109253 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 2/22/2008 7:28 PM
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Even after aj's reformatting, paragraph breaks are your friend.

Second, I do not have any clear idea of what "program" you are writing about.

Third, you make no mention of how to pay housing costs while saving to pay cash for a house.

Last, two words- opportunity cost.

My $0.02.

Regards, JAFO

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Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 109254 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 2/22/2008 7:32 PM
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Hi tnyj5

Hello Everyone, I have been very intrigued by all the responses to Mr. Billythegoat question. I have the same question too. I must be frank and honest with you all as I write this response. I am not a financial guru or as educated about finances as I would like to be or as intelligent as others on this forum. But as I see it, I am a hard working American as are you.

Excellent, welcome aboard!


Now lets keep it simple, I would think that most anyone would rather spend a few thousand dollars to improve your life significantly then spend half your lifetime trying to build the American Dream with a 15,30, or 45 year mortgage and-or in Japan a 99 year mortgage, by owning your propety(s) outright(free and clear).

Spending "a few thousand dollars" will not automatically;
A) improve your life,
B) reduce or extend your lifetime,
C) accelerate your financial independence.

The OP's post was inquiring about the United 1st Financial mortgage acceleration software program, which is unnecessary and overpriced, in my opinion.

BTW, the STRATEGY of using a "Universal Home Line Of Credit" is a very sharp instrument... and a good one, in the right responsible hands..

As our economy lowers deeper to recession status. All I see is Banks going up not closing there doors.

Don't you mean banks BLOWING UP? LOL!

I understand in life that what we do in the future can be risky but can you afford not to take the risk! For a small sum of money. Its significantly less then what you will have paid in your lifetime on your mortgage.

Are you talking about the software? You're *FAR* better off spending that money on your own financial educaiton, IMO.


I plan on living in my home for the remainder of my life so with that said I do not want all my hard earned money going to some CEO of a Bank who cares nothing for my well being or my families, and, he is living the life that I am trying to work for.

Killing your residence leverage to spite the income of a bank executive is financially insane.

Follow the same logic and you'll be subsistence dirt-farming on some god-forgotten foreign plain in order to avoid "paying the man" for whatever you can hallucinate.

You can't win financial independence in a vacuum.


On average most Americans only live in their homes for 5 yrs. then start the whole process over and also with the refi's you just started the whole journey over again.

No... the journey's destination is financial independence (I suggest,) and the fastest and safest path is via carefully employed leverage to the optimized balance.

Cutting back on gasolene to save money will not help you reach your destination sooner nor safer.


By getting a 30 year mortgage on my home. I will pay an excess of between 100-120% of the value of my or our(Bank and I's) home then as if I paid for it out right.

A) Which is significantly less than if you rented that home, and
B) which is significantly less than the money you will lose by not having it to invest (since you buried it in the real estate,) and,
C) which is significantly less than the losses you are at risk of if uninsurable disaster strikes your life, and all that money was entrapped in the collateral (real estate) that just floated down the river, mudslide, quake faultline, tornado path, mother-in-law path, litigation path, etc.


But because I can not I am a slave to the lender.

Apparently you are... emotionally. Either you are in full control of your finances, or you are the slave of you lack of knowledge.


When you receive a fixed 6-8% rate mortgage you will only be paying the rate at the 30th year. In the meantime for the first 29 years ala:(amortization) you have just paid for someone else to live the life that you dreamed of and paid for the bank to purchase another property as you live in today, free and clear.

You have a significant misunderstanding of interest and amortization. It is indeed the worst of all terms... but I do not believe you understand how it really works, and the effect it has on the safety & growth of your net worth.


I am wondering how many of you honestly have paid more on your mortgage on your own without a program? I have not and I am sure some of you have a couple of times or would if you had the extra money.

I avoid giving away any of my hard-gained good-credit leverage when I can. It is gold... supercharged fuel to my financial independence outcomes.


Most of us prefer to own our homes outright which is the American way without some one else taking it from me if an emergency comes up in my life or wanting me to pay each month on time.

You'll reach that point faster with optimized leverage than by avoiding leverage.


And it is only a scam if you do not stick with it!!

No, the software is unecessary and overpriced, in my opinion.
"Scam" is a judgmental term I will leave to others.


When the bumps of life come the system will make the necessary adjustments to help you succeed.

Optimized leverage and adequate financial education (and/or guidance by those who specialize in it) is exponentially more effective.


Also if you can get a HELOC loan now with a your mortgage. Then when you build up your equity sooner and need the money for any rainy days then borrow it again for the time being.

Unless you're notified that your HELOC has been frozen, reduced or cancelled... as have many the last few weeks around the country. (Oooops! So much for "trusting" that you can always borrow LATER.)


Also most of us are not as disciplined with adding a litle more to our homes.

Better to spend your resources on education than software-as-a-crutch.


I am on a biweekly plan and it will cut my 30yr by 7 years. The banks don't want any of you to do this of course because as Mr. Donhoff has said it will be a major financial cut in their profits.

Eeerrrrhhhmmm.... no.... Actually the banks don't too much give a flying monkey as long as you stick out the timeframe on your loan to have their interest income breakeven against their setup and servicing costs, which takes about 2-3 years, on average. All loans that survive after that are in the black.

Don't fall prey to the conspiracists or victimists that think that the services of banking are contrary to the outcomes of a consumer's financial independence. Banking merely offers a pallet of tools... the consumer then has the ability to use them wisely, 'f'oolishly, or not at all.


Ok: with all my rant. Now I have not purchased this program as of yet. So I was just wondering the thoughts of others in the same boat I am in. And I am not looking for an arguement just respectable thoughts. The question I have is: do you want to be more secure by owning your home with your hard earned money (as we we are tying to work for in the end) or do you prefer the Banks making out with your money.

I want financial independence, which means that my passive unearned income, after tax, is more than sufficient for the costs of my chosen lifestyle, at the level of certainty and security I desire.

If I want that while I am still young enough to enjoy it at the level of intensity I claim to have, my best and safest path is by accumulating and utilizing as much optimum leverage as I can to increase my net worth as rapidly as I can, as safely as I can.


The program only helps you with being more disciplined. You do not make any changes to your day to day living. The program only maximizes the use of your money! Also how much freedom would you have if you did not have to pay your monthly payment each month, hmmm I wonder!

ULTIMATE freedom is when the revenues streaming out of my no-brainer safe investments pay all the costs of my lifestyle... not when I have reduced my lifestyle to squeeze below my non-existent investment returns.


What would I do with that extra amount of money!

I give up! ;~) (What "extra money"?)


Remember I believe it's only a scam if you do not use it. Ask the Australians or Brit's for that matter a lot of them own 2 to 3 homes by using this program.

They *ONLY* own multiple homes (those that do) because they re-leveraged further & further in order to acquire more assets. This is hardly "retiring your leverage."


What do you have to lose?

Any hope of financial independence... if you try to go it without leverage.


But your amortized mortgage interest!!! Just my opinion. I would appreciate hearing your thoughts. Thanks

There's a few for ya!

Again.... welcome to BOSAH!
(Hope you take the comments above with the humour AND gravitas they are offered with, as applies.)

Cheers,
Dave Donhoff
Strategic Equity & Leverage Planner

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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 109262 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 2/22/2008 10:35 PM
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Oh God--I didn't bother to read the original post because it was formatted unreadably. Dave, kudos to you for slogging thru that mess.

I wouldn't have bothered to respond as calmly as you did. Alas, I fear that your cogent words are probably wasted.

My 2 thoughts upon reading what he said were:
1) This has all the sounds of the early days if the internet scams that went "Nobody will help us but we can help each other, so [give me your money]."

2) There is no magic way of paying off your house other than paying down the principal. There's no method of payments that can be devised which can avoid paying the principal plus the interest on the outstanding balance.

3) A fool and his money are soon parted. Anybody who pays money to be told to make 13 mortgage payments every 12 months is a fool.

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Author: tnyj5 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 109274 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 2/25/2008 11:13 AM
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Thank you, Dave for your insight. I appreciate what you have said!! I will give it a hard thought!

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Author: jasljohns Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 109277 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 2/25/2008 2:05 PM
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While browsing the posts, I noticed another error related to lack of familiarity, and thought I would clear it up.

While HELOCs are available in Texas, open-ended HELOCs are not. It is encoded into the state constitution, and prohibits equity loans that can be used like checking accounts. This is an essential feature of open-ended HELOCs, the ability to deposit as well as withdraw funds.

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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 109281 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 2/25/2008 7:52 PM
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Open-ended HELOCs are new enough, and available in few enough locations through relatively few lenders that it is not surprising that uninformed people make statements like, "2) There is no magic way of paying off your house other than paying down the principal. . . ."

Okay, it's a slow day, so I bit. Followed the links and read everything. Worse yet, I followed the links that were found in your 1st link (http://uffmoneymergeaccount.com/) .

And it's balderdash.
Reading their wab pages is like reading the one-page infomercials in the back of magazines---full of diatribe against "experts who are blinded and don't understand our system", glittering generalities, and endless hype. The "examples" show impressive graphs but don't actually say exactly how these impressive savings are actually done.

AFAIK, the standard HELOC *is* open-ended. That's what makes a HELOC different from a standard 2nd mortgage. To take out money, you write a check. When you deposit money you are paying down the (HELOC) principal.

This "money merge account" is just a normal HELOC. Heck, they even come right out and say that USBank is their preferred HELOC lender. It's not linked in any way to your 1st mortgage. They imply that making a "deposit" to your Money Merge Account (MMA) reduces the principal on your 1st mortgage---but it does not.

The do say "Deposits to an MMA are not used to pay off the mortgage principal. Rather, income and other deposits to the account offset the mortgage principal by the amount of the average deposit in the preceding month." They never say how this "offset" is done. As stated, it would require the 1st mortgage lender to allow a payment to principal that you could take back whenever you want to. Just *who* are the 1st mortgage lenders who will do this???????

Dig further and I found that these claims are backed out of in comments in posts on other web sites. Ha! Then I read (many times) that you don't even need a savings account--because you can always draw on your HELOC. Even if you lose your job, you can keep up the 1st mortgage payments via the HELOC.

Except for a couple of tiny problems:
* The HELOC lender can (and will) freeze your HELOC at will.
* Every HELOC I have had specifically forbids you from paying your 1st mortgage payment from the HELOC.

So....It's a scam. It's selling you thin air for $3500.

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Author: jasljohns Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 109517 of 127810
Subject: Re: Money Merge Account, HELOC, scam? Date: 3/9/2008 6:12 PM
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Okay, it's a slow day, so I bit. Followed the links and read everything. Worse yet, I followed the links that were found in your 1st link (http://uffmoneymergeaccount.com/) .

And it's balderdash.


You obviously did not read everything, or you could not have come to your conclusion, had you also understood it.

Reading their wab pages is like reading the one-page infomercials in the back of magazines---full of diatribe against "experts who are blinded and don't understand our system", glittering generalities, and endless hype. The "examples" show impressive graphs but don't actually say exactly how these impressive savings are actually done.

It seems that you have fallen into diatribe

AFAIK, the standard HELOC *is* open-ended. That's what makes a HELOC different from a standard 2nd mortgage. To take out money, you write a check. When you deposit money you are paying down the (HELOC) principal.

This "money merge account" is just a normal HELOC. Heck, they even come right out and say that USBank is their preferred HELOC lender. It's not linked in any way to your 1st mortgage. They imply that making a "deposit" to your Money Merge Account (MMA) reduces the principal on your 1st mortgage---but it does not.

You should have tried to understand that an open-ended HELOC differs from the conventional closed-ended HELOC, upon which you base this flame.

The do say "Deposits to an MMA are not used to pay off the mortgage principal. Rather, income and other deposits to the account offset the mortgage principal by the amount of the average deposit in the preceding month." They never say how this "offset" is done. As stated, it would require the 1st mortgage lender to allow a payment to principal that you could take back whenever you want to. Just *who* are the 1st mortgage lenders who will do this???????

Oh, had you read and understood my input, you would have read that "it is done" by offsetting the principal (upon which the interest portion of the payment is based), thus allowing a larger portion of the regular monthly payment to apply toward reducing teh principal.

Dig further and I found that these claims are backed out of in comments in posts on other web sites. Ha! Then I read (many times) that you don't even need a savings account--because you can always draw on your HELOC. Even if you lose your job, you can keep up the 1st mortgage payments via the HELOC.

You never read anything like that in anything I ever wrote. Yeah, there are a lot of people involved in selling the program who understand it no better than you, and some of them may have sad something like that.

Except for a couple of tiny problems:
* The HELOC lender can (and will) freeze your HELOC at will.
* Every HELOC I have had specifically forbids you from paying your 1st mortgage payment from the HELOC.

So....It's a scam. It's selling you thin air for $3500.


I'll add only that your first point is balderdash and your second point is based again on an apple, while we are talking about oranges.

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