26
Apr
2007
More on the Money Merge Account / One Account
I encourage everyone to go look at the conversation going on at The Simple Dollar in reference to the money merge account/one account. They’ve had a lot of comments weighing in on the subject.
In addition, it appears yet another financial institution is offering this type of product. Salem Five calls it their Ultimate Account.
If anyone is interested… feel free to contact me… 407-697-8869.
I am a PUBLIC SPEAKER and am currently doing seminars on United First Financial’s Money Merge Account for two of the biggest banks in the country (one of these banks has attempted to privately license the software for themselves, but was turned down).
They are spending THEIR money marketing this program to their customers… WHY?
[] Helping your customers be financially secure is a GOOD thing for your industry
[] You get the HELOC business
[] You get NEW potential customers coming in your door – great prospecting tool.
[] If you do mortgages – we UFF agents find that about 1 in 4 or 5 clients CAN save even more by refinancing – even though they do not need too to make the program work. So there is the potential to increase your overall mortgage business.
AND… for current mortgage clients….
[] If just 50% of the people you have put into mortgages are going to buy another home (and need another mortgage) in the future…. if you could get just 50% of that 50% on this program… you have now accelerated their ability to get their next home from the national average of 5-7 years… to 2-3 years. Would that increase your overall mortgage business by 12.5% ??
Sadly though… the guy that does that Simple Dollar blog… does not really understand the math behind this program. This program OUT performs taking every penny of your discretionary income and throwing it at your mortgage.
Why?
This works off 5-FIVE math concepts. Two are things you can easily do yourself (hence some of the confusion) … The first 3 are the ones that the software is necessary to manage properly and get optimum results for.
1. Value of your stagnant money (money sitting around waiting to be spent)
2. Leverage of open-ended simple HELOC interest structure against (effectively) compound closed-end interest structure on the primary mortgage
3. Interest cancellation (properly treating HELOC so effective interest rate remains at about 3% – or less than primary mortgage)
4. Discretionary income (easy to do yourself)
5. Debt restructure (easy to do yourself also)
Value of Stagnant Money? It is the arbitrage that the Money Merge Account puts to work for you. See, normally we pay the bank 6% for our mortgage, and they pay us 3% for our savings and 0% for our checking. This spread puts our money to work for the BANKS. Now this program puts it to work for the homeowner. What is the value of your Stagnant (sitting around) money? This is one of the math variables the software is able to calculate for you on a average daily balance basis – down to a gnat’s whisker. Folks with more cash flow… even if they spend every penny they make every money… can knock extra years off their mortgage. The difference between $4000 and $40000 in income (even when it is all spent back out by month end) can knock another 1-2 years off the mortgage.
Interest Cancellation? This is what happens when you treat your Home Equity Line of Credit (HELOC) like a checking account. For instance, even if your heloc is at 10%. It only costs you 10% if you pay it back the LAST day of the year. But what if you pay it back in 3 months or less? Then your EFFECTIVE interest rate is actually less than 3%. Because you start depositing your INCOME into your HELOC account… You are replacing borrowed money very quickly. Also… You drive down the principle balance with each deposit… So even though you may spend most of that money during the month… The Average DAILY balance of the account stays low. Our software is able to calculate exactly how high you can let the balance on the HELOC stay… In order to end up with the appropriate EFFECTIVE interest rate for maximum savings.
Leverage of interest structures of the 2 loan products? What we mean by this is this… If you borrow $1 from a HELOC – even IF the HELOC was 10% interest… The most you would pay in interest – even if you waited till the last day of the year to pay it back – would be 10 CENTS. However… If you take/borrow a dollar and then apply that $1 as a principle payment to your primary mortgage… That $1 will save you $4 to $5 in interest on your mortgage (on average). For example a $1 principle payment on a $200,000 30yr mortgage @ 6% – would save you $4.99 in interest if it was applied with the first loan payment. On a 15 year loan it would save you $1.44 in interest. Does it make sense to spend 10 cents to save $1.44? How about $4 to $5? Strategic short term borrowing from HELOC helps rapidly drive down the principle of your primary mortgage. Also… the TIME value of the money comes into play here also. You are borrowing against your cash flow and your stagnant money in advance.
These 3 math principles/concepts are why the algorithm-driven United First Financial software is necessary for maximum savings. Can you do this yourself? Absolutely! United First Finanical has always said that a disciplined person, who does not mind doing (and knows how to do), the MATH required, could get similar results doing it on their own. However… This is MATH… Not horseshoes or hand grenades. Close could still be $10,000, $30,000, $60,000+ away from the results you can expect to get when you use the RIGHT TOOL for the job. This is the right tool.
Other things to note… The Analysis has the cost of the program already built in. The cost comes out of the equity line of credit – not out of pocket. For most homeowners… There are no out-of-pocket costs to get this rolling as you can generally find a HELOC at no cost other than interest.
If your Credit Union, or Bank is not competitive on your HELOCS… get there QUICK!
Also… In case this is not going to be your last home… This program is transferable at NO ADDITIONAL cost to your next 4 homes. Also… Get a PERSONAL ANALYSIS done by a UFF agent. Page two of the ANALYSIS on your numbers will show you the equity you will have built into your home in just the next couple of years. Just in case you were thinking of moving, or investing.
BETTER savings… A few months ago the State of Utah audited United First Financial. They found out several things when that happened.
One… That the real software was performing, on average, 20% BETTER than the Analysis that clients had been given as part of their money back guarantee.
Two… That the HELOCS our clients were using, while they had interest rates, on average, between 8 and 10 percent… They were performing at a little over 3% EFFECTIVE interest, and….
Three… That 98% of our clients were logging in monthly to use their software – they were staying ON TRACK!! The simplicity of this program is what makes the DISCIPLINE factor so easy… Without the software… Less folk would have the discipline, or the TIME to do it.
FINALLY… The program has a MONEY BACK GUARANTEE. In essence, it says that… Provided the numbers you gave us were accurate, provided you follow the prompts of the software, and provided your financial circumstances do not change significantly (for instance that you do not add a boat to your equity line after the fact), that our software will perform as good, or BETTER, than your Analysis. The Analysis is sent in, with your signature, when the software purchase is made.
GUARANTEE – Better Business Bureau..
How good is our guarantee? Check out our BBB report..
>> http://www.saltlakecity.bbb.org/commonreport.html?bid=22021100
Anyway… feel free to call me if you have questions about his program.
It IS good for YOU… it is good for your clients… and it is good for the Banking and Mortgage Industry AND for the financial health of the average American family !!
Sue
407-697-8869
Sue, thanks for the comment. I encourage anyone looking into a One Account or a money merge account to do lots of research. Go visit the Simple Dollar discussion I originally posted. Personally, FI’s (banks and CU’s) have an opportunity to provide this account directly to their members or customers. It doesn’t take a $3500 software program to do it. United First Financial provides one option to do a money merge account, but I don’t believe it is the correct one.
There are BBB complaints for Accelerated Equity are here. United First Financial and Accelerated Equity are owned by the same person.
In addition, it doesn’t appear United First Financial owns the trademark for the Money Merge Account. Here is the USPTO page. How is it you guys can use that for a product name when it appears that National Loan Servicing Center owns it? Or is that another of Mr. Witman’s companies?