“Interest cancellation” – MMA claims that by loading up the HELOC and running our paychecks through the HELOC, we reduce the balance so much that we save lots of money that way, and that alone is worth $3500. OK, so how much can we save? Well, let’s assume our mortgage rate is 6%. That means each month, we are charged 1/2% on our mortgage balance, the whole balance. But if we are using interest cancellation, the most that we can save is whatever our monthly salary is. So, if we bring home $5,000, the largest HELOC balance we can offset is $5,000. How much will that save? $5,000 times 1/2% is $25. That’s $25 per month or $300 per year. So MMA wants you to spend $3500 upfront to save $300 per year. Do you know how much interest you would save if you just put $3500 towards your 6% mortgage? OVER $16,000 and 16 months. (Not $4000 as I said in a different post)

“Factorial math” – MMA claims no one except a computer can figure out the best possible way to pay all your bills and debts because of all the possible combinations. LIES. There is only one SIMPLE BEST way to pay off all your debts. You pay off the highest interest debt first and work your way down using a DEBT SNOWBALL. It only needs addition and subtraction.

The One Account is Only in the UK. Here are two comparable programs in the US. Each have a specific client base as does the Money Merge Account.

I read a lot of stuff about how bad the MMA is or how you can do it yourself. There are usually 3 to 4 major points that people are missing about how the program works.

1. The discretionary income that is left over every month is NOT simply thrown at the first mortgage. It goes into the leverage engine. Yes, I said leverage. Thats the point.

2. Have you ever been to a webinar about the program? If you have and did not see how we use the discretionary inside the leverage engine, I apologize. Please get a hold of myself or anyone else and we will show you how it works.

3. When the program derives a number that is called an equity contribution, it is based on that persons current financial position based on what they inputed into the software. It is dollar and time specific. This means that the amount and time changes because we are capitalizing on the time value of money.

4. It costs $3500.00! Yes it is a significant investment. It is also intended to be taken out of the equity line to be payed back over a short amount of time. You are borrowing the banks money to pay off the bank loan fueled by your monthly income. Everyone that I have run into promoting this program wants to help Americans. We also have to educate people on how money works and how the program works. That takes a lot of time. Time on our parts to learn everything we can and time on our clients parts to listen and take note. If it was $99.00, how much education do you think you will get? $99.00 bucks worth. How much support do you think you will get afterwards? $99.00. We increased our client support hours to 6am to 10pm. If something changes in your lifestyle, they can help. Thats the point.

So, the discretionary income every month is not simply applied to the first mortgage. Anyone can do that. The money goes into a leverage engine that allows a larger amount to be directed towards the first mortgage ( which is not necessarly a big HELOC, thats the other programs ). When these amounts are applied, they are not gone. Meaning if you want to access your money again, you can do so through the HELOC you are using. There is no impending financial doom because people are ‘dumping’ everything into their mortgage. As you pay down your mortgage, you simply move the HELOC into the equity you built into the first mortgage by using the program to re access your funds.

I hope this clears a few things up. If it does not, let me know and I will host webinar for you to answer questions.

Thanks,

Robert Wilson
MoneyMergeChicago

There are some basic principles that are not accurate in the discussion thread that I would like to address.

1. The entire mortgage is not rolled into a HELOC using the Money Merge Account Program. There is NO refinance of the first mortgage necessary. This makes the product transportable from one mortgage to another, which is very different from a “One Account”, “CAM Mortgage”, “MacQuarie Loan”, “CMG Loan”, etc. With those other “mortgage” based products, each time I buy or sell, I have new closing costs/points to pay. I every case I’ve seen, those costs far outweigh the cost of the Money Merge Account program.

2. The amount of money that is used to pay down the first mortgage from the HELOC is a major factor in the effectiveness of this strategy. The Money Merge Account program uses certain mathematical calculations to determine the exact amount of money to transfer to minimize the interest paid on the HELOC (using a person’s income to offset interest) and maximize the interest saved on the first mortgage. What makes these calculations unique is that they are dynamic, meaning that they adjust every time you spend money (expenses) and every time you earn money (deposits).

2. Interest Cancellation is indeed a major factor of how the software works. Here are some math examples of the interest cancellation effect based purely upon when a person gets paid and the effect of depositing that amount into the HELOC.

Example: This example assumes a 10% rate on the HELOC.

If I have a $0 balance on my HELOC and I spend $5000 on the 1st day of the month (let’s say it’s a transfer to my mortgage), providing that I make an interest only payment on the 1st day of the next month, I would pay $41.67 in interest for the $5000.00 that I borrowed for the entire 30 days. However, if I earn $5000.00 a month and if I deposit $2500 on the 15th and another $2500.00 on the 30th, my average daily balance (which is the interest calculation method used on HELOC’s) is reduced. Here’s the math @ 10% interest.

10% / 360 gives a daily factor of .000277777

$5000.00 x .000277777 = daily interest charge of $1.388885
$1.388885 x 30 = 41.67

$5000.00 x .000277777 x 15 = 20.83 (because the balance is re-adjusted by the bank on day 16 when I deposit my $2500.00 on day 15)
$2500.00 x .000277777 = a new daily charge of only .6944425
.6944425 x 15 = $10.41

So, here’s the comparison $41.67 vs. $31.24 ($20.83 + $10.41) based on the simple strategy of depositing my income into the HELOC. That’s an interest cancellation savings of $10.43 or roughly 25%. That means my 10% loan wasn’t a 10% loan, it was effectively a 7.5% loan.

Now, the effect of that transfer towards the first mortgage create a compression in the time/value cost associated with the money from the mortgage. In essence, I just canceled apx. $28,000 in future interest and I increased the amount of every future principle payment that is going to the mortgage.

The big question is, was $5000 too much to transfer or too little. Using the purely hypothetical numbers that UFirst uses in their corporate example, if I’m only 90% right, I still lose by not purchasing the Money Merge Account program.

Now, if you’re sending an extra $1000/mo to your mortgage and are disciplined enough to do so, it may not make sense to use the Money Merge Account program. Our experience is that most people aren’t disciplined enough. More importantly, who has $1000.00 extra to send towards the mortgage every month.

The Money Merge Account program allows you to accomplish the same thing, on your current income, with zero stress.

One other quick point. The Money Merge Account isn’t about just paying off your mortgage. It’s about fiscal responsibility and solid money management to maximize the power of your money. It’s not for everybody, but if you want to pay off your mortgage, we’ve not found an easier way to help our clients do it.

Travis Mitchell
Debt Free Project

Fancy software is not going to help people escape the real estate bubble in my opinion.