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United First Financial Money Merge Accounts: Scam or Legit?
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A reader recently sent an email asking about a program United First Financial runs called a Money Merge Account and whether it was legitimate. United First Financial promises that the program, which costs $3500, would have you pay off the mortgage in one-third to one-half the time it normally would take. Knowing nothing about money merge accounts and knowing a little bit more about simple math, I smelled a fat $3500 scam brewing. The only scenario in which I could see $3500 cutting your mortgage in half is if you had a $7000 mortgage. But, setting my mental scam alerts aside, I did some more research about the plan.
Apparently it’s a fancy name for an accelerated mortgage repayment scheme. The first step in the money merge account is to take out a second mortgage on your home, a home equity line of credit. Then, what you do pay your entire paycheck towards the first mortgage and withdraw money from the HELOC to cover your expenses. You save a little money because the interest on a HELOC is calculated based on average daily balance rather than the final monthly balance. This lets you pay off more of the mortgage at the beginning of the month and then be charged less interest on the HELOC. (this assumes the same interest rate, which is a big flaw)
However, the plan also has a lot of other assumptions and flaws.
- 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.
- 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.
- 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.
- 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?
- Finally, as if all those weren’t enough, you have to pay $3,500 for a program to help you do this!?
In researching this article I researched a lot of sites and they were nearly unanimous in their opinion that these types of programs are not worth the money (not surprisingly). They’re not scams in the sense that you pay your $3500 and they disappear into the night but it’s something you can do yourself.
This begs the question, should you use it to force discipline? I could justify paying $100 to enforce discipline because it can save you quite a bit in the long run, if you can overcome the failings, but $3500 is ridiculous. If you have $3500 and you want to pay off your mortgage sooner, send a $3500 check to your mortgage company. (if you want a legitimate and easy way to pay off a mortgage faster, consider making mortgage payments every two weeks)
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JimmyDaGeek ~
I have only been using the software since the beginning of August. I don’t know if I should share all that personal information in a public forum. I feel a bit leary doing that, but I really would like to. What are you going to do with the information I provide? My situation is a good one, I comfortable saying my loan term is a 10 year note with a little less than 8 years to go (without the software).
I really believe in the software, but I also believe as I’ve said before, in order for the software to work, you do have to have a good salary, positive cash flow (the more the better) and some discretionary income (again the more the better).
I’ve played around quite a bit with mortage calculators and just by making extra payments with my discretionary income, I can’t come close to beating the results I’m getting with the software. Using the software helps you use your money, plus the banks money to its highest potential.
Its similar to using a credit card to pay all your montly bills. Then, paying it off each statement. You just used their money, for one month, interest free to pay your bills. Its all about leverage. When you utilize the HELOC as your “checking account” you have all your “money” in one place.
Putting money in a savings account doesn’t “SAVE” you as much money as borrowing money off of a HELOC and paying down your mortage with it. Then using your paychecks to offset the interest you would have paid.
I will repost my example from an above post:
Here’s an example:
—————-
Loan: $275,00
Rate: 5.875%
Term: 30 years
Start Date: Jan 2006
Average monthly interest paid: $941.28/month
Beginning interest paid for first year: $1468.75
What the goal would be is to keep the total DOLLARS of interest per month BELOW $941.28. Any time this happens in a month the borrower is saving money and shortening the term of the loan. Just try and imagine what one would have to borrow on the HELOC to accumulate $941.28 in payment/interest each month!
On the above example if the borrower draws $3500 from a HELOC on month 28 of the principal mortgage and applies it to principal it will save them $13,796.85 in interest over the life of the loan.
***Yes! Borrowing just a minimum of $3500 from a HELOC can save someone almost $14,000 in interest ****
Its all about INTEREST SAVINGS, that’s what’s paying down your mortgage loan! You aren’t going to be able to take that same $3500 into a saving acount and MAKE that kind of money!
In addition, how long did it take you to save up that kind of money?
From the MMA challenge.pdf docuement it says the mortage payment is $1,740.80 per month. If I use the pmt function in Excel for a $200,000, 30 yar 6% mortgage I get a payment of $1,193.14 or $1,199 depending upon if the payment is at the first or end of the month.
Can somebody help me out?
I watched the new video for the new software where you don’t need a HELOC for the MMA program and you can just use a credit card. It shows how John and Rebecca Jones can pay ALL expenses with a credit card.
One must consider that credit companies charge merhcants a fee to take payments with a credit card. The fee varies upon the size of the merchant. The typical fee per transaction ranges from 2 to 4 percent. A mortgage company will have little incentive to accept a credit card when it will have to pay a fee to take the payment. I doubt many car loans can be paid with a credit card as well. This means that the cash float used in the video is really not as large as it seems. My question about the MMA Challenge.pdf data is, does it assume just the other expenses of $2,979 are floated on the card, or does the primary analysis include the mortgage payments in the float as well?
Scott
Scott,
You missed the post above where James says the $1740.80 payment includes the escrow amount. And, BTW, since all mortgages are paid in arrears, that is, a month after you borrow the money, the monthly payment is $1,199.10
mma user, please clarify something.
Using a mortgage calculator and your numbers: $275,000 borrowed for 30 years @ 5.875%, I get a monthly payment of $1,626.73 with $1,346.35 interest paid for the first month. And, for you to pay less than $1,000 per month interest, average, for the last 20 months, you would have had to put about $7000 per month extra towards your mortgage.
mma software user said, “Its all about INTEREST SAVINGS…”
As gr8whyte at the simpledollar thread said aptly, “Saved mortgage interest isn’t an accurate gauge of how well your MMA’s working. What’s important is the actual total interest paid (mortgage + HELOC) because these are actual dollars leaving your pocket. Saved interest dollars won’t leave your pocket; they’re just a number on paper. A person who buys my $1 million 92 Civic for $10,000 would be saving $990,000 but he’d lose on the deal because a 92 Civic isn’t worth anywhere near $10,000. What the buyer should do is ignore the $990,000 savings and evaluate if the Civic’s really worth $10,000.”
MMA Software User:
“I’ve played around quite a bit with mortage calculators and just by making extra payments with my discretionary income, I can’t come close to beating the results I’m getting with the software. Using the software helps you use your money, plus the banks money to its highest potential.”
Sure UFF helps you do this, nobody is disputing this point. The fact is that the leveraging your paycheck really is not difficult to do on your own. Not to mention the money saved by using a HELOC shuffle or CC shuffle is not really that much and definitely not worth $3500.
The amount of interest you can cancel is directly related to your monthly salary and the interest rate of the amount you are canceling. If your canceling interest on your mortgage at 6% APR and your monthly salary is $5000. The VERY BEST case scenario, assuming all your bills are paid at the end of the month, and you are paid on the first of the month, you can save $25/month. If your canceling CC debt you can save slightly more because your canceling a higher APR debt.
Your statement that you can’t come close to the results on your own is false, the MMA simply does not save you that much money.
James Barnes,
You said in various posts to Craig and others:
“There is no way you could duplicate the effects of using the software yourself. Go ahead. Take 25,000 in credit card debt and a $200,000 mortgage and $50 (fifty dollars) in monthly disposable income. Lets make it easy and say that all the credit cards are exactly the same rate of 11%.”
“Your going to find out quickly, how hard it is to figure out how and when to move the money to maximize the elimination of interest on the credit cards with only $50 in decretionary income. ”
“It never fails that when people like you say they will show us they can do it themselves or better than the MMA, they never do.”
“Everyone on this board who says the math has been done never does the math on a situation like the one above.”
Now that JimmyDaGeek has posted an easy payment method shown in his spreadsheet showing the interest saved versus using MMA, what are your thoughts? For all the “chest beating” you did to get someone to do your debt challenge, I hope you can help us address the possible differences from your MMA analysis and the “debt snowball” method.
-L2G
I think James Barnes went to the COLONY to look for David Moore.
With the Mortgage Market the way it is, and UFF getting harder and harder to sell, James Barnes is probably posting his resume on Monster.com.
WhackAShill I thought you said this forum was about the UFF product and its uselessness, not about who someone is or where they went.to look for somebody else or where they are probably posting their resume on Monster.com. It looks like bigdon is also talking about somebody instead of talking about the UFF product. Like Jim said, “You’re focusing on the messenger rather than the message.” That is why I do not care if you own many Coldwell mortgage offices or not and how do I know if you are telling the truth anyway.
Scott and JimmyDaGeek I think you have good information so I think now that UFF is not good for. But I will wait before a final decision to see what somebody else has to say. I have learned to not trust somebody who talks about other people to try to make himself look good and I have learned to get more than one opinion on something. If James Barnes cannot answer the questions I will have to say that what he says is not true. I think what I am saying is good for people to read so you will not be tricked by either side.
Strategy: pay minimum payments on the smalles interest rate debt, apply all extra funds to highest debt first.
I ran the numbers in about 10 minutes and came up with total interest costs of $109,548 ($5,753 car, $4,812 credit cards, $98,982 house)
I made three amoritization tables and made sure the monthly debt service did not exceed $2,480 per month.
The total amount of money to service debt is $1,199 + $720 + $510.93 + $50 = $2480/month for the challenge .pdf file.
Here is the scenario.
months 1-41 pay $770 to credit card, $1,199 to house, $511 to car
month 42 pay $552 to credit card (it is now paid off), $1,199 to house and $728,94 to car
month 43-51 pay $1,280.92 to car, $1,199 to house
month 52 pay $239 to car and $2,241 (car is now paid off)
month 53-147 pay $2489 to house (house is now paid off)
Assumptions” no HELOC, no paying expenses from a credit card, and not tapping in to the $2,100 in savings.
It looks like this simple method I did in less than 10 minutes beats the $3,500 MMA software by $14,759 if I did not make any mistakes.
MMA
Total Interest paid $122,309
Total payments $379,305
Simple method
Total Interest paid $109,549
Total payments $364,548
I have it all docuement in an excel sheet. It is not hard to do this. Anybody with a simple math education can do it. Just follow the rule: Pay minimum payments to the lowest interest rate debt until it is paid of and pay as much as you can to the highest rate debt. Once that debt is paid off, do the same again and again until all debts are paid off.
Scott
ps. I’ve had trouble posting here. If this is a duplicate please forgive me.
Bonhoeffer,
What else is there to consider? The math that Jimmy and others have shown proves the uselessness of the product. If you still want to purchase the product, I ask…… why?
Excuse me if I find it humorous that James Barnes left after discovering he was blatantly wrong.
For what purpose would any of the “naysayers” have to trick anyone? There is no financial benefit for any trickery. If anything we are here to show the truth of the product which UFF tries to hide.
WhackaShill it is good that you now say you want to show the truth of the product instead of just criticizing other people and acting like you know something about them. I think you have made the right decision.
Maybe I missed this, but I do not think somebody answered Kevin who said “Speaking of doing things yourself but choosing to rely on services that make life easier…Hiring a Real Estate Agent falls into that category! That is a service that you are backed into a corner to use since everyone else is! I guess that is a SCAM also.” I do not agree with Kevin that this is a good comparison because I do not think it is the same thing, but I still like to see someone else answer this.
You also say you think it is humorous that James Barnes left after discovering he was blatantly wrong. Maybe it is also a good thing to say that I think it is humorous that you only answer some things and not when I say that you want to look smart by saying someone else is a shill or is not smart. If you really want to show the truth of the product why can you not stay on that subject instead of trying to show the truth or false of the person, like attacking the messenger instead of the message. I hope you see that this is a good thing I want to show you and not be offended and get mad.
What else is there to consider? The math that Jimmy and others have shown proves the uselessness of the product. If you still want to purchase the product, I ask…… why?
Ellory this is hard to admit yet I have to say I tried but I cannot understand the math. It is too hard for me to make sense yet I do have education. So maybe I will not use this product for now since nobody who is using it can tell me it is good. Thank you for making your comment.
JimmyDaGeek ~
I’m sorry, the mortgage calculator reverts back to $300,000 loan. I forgot to change it back to $275,000. That’s where my discrepency is…
Here are the correct numbers: (I’m just going to stick with $300,000 for loan)
Loan: $300,00
Term: 30 year Fixed
Interst: 5.875%
Monthly Payment: $1774.61
——————————–
Avg montly interest over life of the loan: $941.28
Interest paid in first month’s payment: $1468.75
————————————-
If someone was to pay an extra $3500 to principal in month 28, the total interest saving on the life of the loan would be $13,833.90.
The average monthly interest for the life of the loan would decrease from $941.28 to $902.85.
Hope this clarifies my numbers, sorry for the mistake and thanks for pointing it out.
————————————————————-
I’m not sure what you meant by this statement, “And, for you to pay less than $1,000 per month interest, average, for the last 20 months, you would have had to put about $7000 per month extra towards your mortgage.” ?
What point are you trying to make here?
mma user
I am not sure what point you are trying to make either. Why are you trying to reduce the interest below $941.28 per month? Any dollar you contribute extra to your mortgage will save you money in the long run. Why did you choose month 28 to pay $3500 to the mortgage?
To truly understand what is going on in a mortgage, create an amortization table for your loan. Each month’s payment will be broken down to interest paid and principal paid. The interest paid is calculated on the prior month’s balance.
In the beginning of the loan, your principal payment is small compared to the interest you pay each month. One way of understanding accelerated loan payments to pay the principal you owe for the *next* month as an extra payment this month. This will let you “skip” forward one month on the amortization table. And the total interest you save is equal to the interest you “skipped” for that month.
So, to use your example, if when making the first month’s payment, you added in the second month’s principal of $307.36, you would save $1,467.25 in interest and skip to the third month on the table. This is a savings of almost 5 to 1.
JimmyDaGeek~
The point I was trying to make was to show the numbers were more about comparing dollars of interest on the mortgage to dollars of interest on the HELOC, not merely comparing interest percents.
Someone was saying it doesn’t make any sense to borrow money off of a higher interest rate variable loan to pay down a fixed lower interest rate mortgage. I was trying to show how it was, many times, worth it.
————————————–
If someone wants to spend the money (like I did) on the MMA software, what you get is the ability to NOT change your monthly spending/financial plan, BUT still be able to have the money to pay off your loan in significantly less time.
The examples you all have been illustrating show how an individual DOES have to change the way they budget and spend. They actually now have to come up with an extra amount of money which will go to principal each month. In your example it would be around $300/month. Most people don’t have that kind of discretionary income! With the MMA software you just have to have some discretionary income to have success. In your examples you have to have a lot!
The reason I bought the software is because I didn’t want to change my budget or the way I spend in order to pay off my mortage. I just wanted to leverage the money I had more effectively. For me, it gives me peace of mind knowing the spending I am doing now, is not going to negatively effect me in the future.
mma user
I wonder if you see the irony in your statement.
You don’t need $300 a month to pay down your mortgage, just a dollar a month, or any amount you want. You are telling us that you couldn’t find an extra dollar in your budget to pay towards your mortgage each month, but you could borrow $3500 to pay for software to find that dollar for you.
And, now you are telling us that you did not change anything about your budget or your spending habits, and MMA is finding money for you through interest cancellation only. As you have posted above, that $3,500 is costing you $14,000 in interest you did not cancel. I hope you find that $14,000 somewhere. And, as others have posted, the maximum interest you can save each month through interest cancellation is equivalent to your take home pay times your HELOC monthly interest rate. This is not magic, just math.
You asked what I would do with your numbers? I thought I posted that when I made the request. I would show you how doing it yourself will beat MMA. If you are paying a higher interest rate for your HELOC than your mortgage, MMA is costing your interest, unless they have changed their strategy which seems to keep between 1.5 and 2.25 times your take home pay in the HELOC as a balance. The ideal amount should be below your take home pay.
Jimmy DaGeek please tell me what if your HELOC interest rate starts at 3.9% for 6 months, then is 1% below prime after that and your mortgage interest is 5.75%. My mortgage was $185,000 that took out in June 2005. My monthly mortgage payment is 1079.61. Is the UFF system good for this since the HELOC interest rate is lower than mortgage interest rate. My salary is paid 2 times each month so 24 payments per year. Bills average $3785 per month with house payment. This includes tax and homeowner insurance I don’t pay with mortgage payment. Net income is 2251.66 each pay day or 4503.32 per month. I have discretionary income of 718.32 per month. Before I have been putting this in savings account for 2.42% interest. What could happen if I use this instead to pay to mortgage or if I buy UFF software and use it to pay into HELOC so I can pay more down on mortgage faster. My balance in savings is 4414.22. Jimmy DaGeek what do you think I should do and why do you think so. Maybe I can understand your math if you work with my figures.
JimmyDaGeek~
Nope I didn’t change a thing with my spending habits. Of course the MMA software is not finding me money either. Its just putting to better use the money I had to work with. For starters:
1. I pay all my bills and living expenses with my credit card. Then, I pay it off each month. This entitles me to use the credit card companies money interest free for one month. It also earns me free airplane tickets. :-0
2. Next I never include my property taxes or anything else with my mortgage payment. I have no escrow acount, just a mortage. This ensures me that I don’t loan out my money interest free for a year to the bank. Because we all know mortgages companies are paying property taxes annually.
3. I pay as many bills as I can yearly or biannually (ie: car insurance, life insurance, AAA, etc.) Freeing up money to go to work for me…for most of the year.
4. I have very little debt in addition to having very decent montly income. So when I do have to deposit my paychecks to the equity line, I don’t have to pay much money out.
All of the above points give me positive cash flow and a lot of extra money each month. This extra money, though, is not necessarily discretionary income. Its money I may have to pay out in bills, but not until later in the year.
Before the MMA software, I was keeping this extra money in a “holding” account. (An online checking account – fee free). It wasn’t gaining me anything. Now, with MMA, the software can look ahead and see where/when I need to utilize this money. In the meantime, though, I borrow against the HELOC @ 4.99% interest and pay off my 5.875% mortgage, using this money to keep the balance low.
I’ve only used the system for less than 1 month. For the month of August I’ve made 1 principal only payment so far, approximately $3500. The software has scheduled another principal payment with my next payday of around $1700. Then, again on my 2nd payday in Sept. it instructs me to make an additional $7500 to principal.
So far the highest balance I’ve carried on the equity line was around $14,000. Right now my balance is less than $6900. Thus far I’ve paid $18.74 interest on the MMA and cancelled significantly more interest on my mortgage.
There is nothing I am doing differently with my finances, I have the pay the same bills, incure roughly the same amount of living expenses and nothing has really changed other than my mortage will be paid off in 1/4 the time.
The only reason I keep typing messages on this board is because I believe the software works. Yes, you may be able to do this yourself, but most people can’t! I’m great with my finances, but I couldn’t ever “stomach” something like this without “seeing” forward. The software enable me to do this. I think it works, I’m so excited about it I wanted others to see its benefit too, but instead I just keep running into people like you who say it can be done without paying the fee and on your own. I don’t dispute this can’t happen I just believe for most everyday folks, this could actually help set their finances straight!
Bonhoeffer,
I am pretty sure the fancy features of the MMA program are not enough to pay for the software itself.
I ran your numbers in my “mortgage gps” excel spreadsheet and it says you can cut your mortgage by 15.6 years and save $106,218 in interest.
If you want to be more aggressive and put your savings to work and use the LOC for a rainy day fund then you save a total of 16 years and $114,465 in interest.
You can probably save a few extra bucks by playing the HELOC shuffle but those extra bucks will never pay for the software. Has a MMA guy run an analysis for you? I’d love to compare it.
Scott
MMA Software User wrote:
The point I was trying to make was to show the numbers were more about comparing dollars of interest on the mortgage to dollars of interest on the HELOC, not merely comparing interest percents.
Someone was saying it doesn’t make any sense to borrow money off of a higher interest rate variable loan to pay down a fixed lower interest rate mortgage. I was trying to show how it was, many times, worth it.
____________________________________________________
I’ve heard this many times and maybe I can explain it. The people who say this will usually explain it with an apples to oranges comparison. It goes like this. Borrow say $5000 from the HELOC to prepay your mortgage at 8%. Pay the HELOC back over the course of one year. Say you have $200 in interest costs from the HELOC.
Now the people who want you to believe that was a good decision say “look $200 in interest saved you $13,000 in future interest on your 6% loan!” The $200 in interest did not save the $13,000 in interest, it was the $5,000 prepayment that you made over the course of 1 year!
Believe me an 8% loan runs up interest costs fast than a 6% loan. So borrowing the $5,000 at 8% to pay the mortgage was really not the optimal situation. You should have just prepaid the mortgage as the cash came in that you used to pay off the HELOC Now if the HELOC has a lower rate than the mortgage then it will save you money.
You can always split hairs on the timing of the payments but on month-over- month basis you will never save any money borrowing at 8% to pay off a loan at 6%. If you were expecting a $5,000 windfall on the day just after your mortgage interest calculation for the month was made, it would then pay to borrow from the HELOC to prepay the mortgage and then pay the HELOC immediately off when the $5,000 came in. This way the prepayment can effect the calculation of the next month’s interest. If the prepayment comes after that date, it did not help you for the first month, but it will help you in the following months.
The original MMA software example with Bob and Rebecca Jones has such and example and it is easy to show the MMA results were worse using a HELOC with a higher interest rate than the mortgage rate. See this video.
http://www.youtube.com/watch?v=wuHzh15Ko5A
Ok here is my rebuttal to the MMA Challenge from James.
http://spreadsheets.google.com/ccc?key=pX0OcvF_IKpGIwVE7b5dnAQ&hl=en
You can see for each debt an amortization table and the payments which will change from time to time as something else gets paid off. It’s all out in the open month-by-month unlike the MMA documentation. I highlighted the transition month payments in yellow. These are the areas where a high interest rate debt is paid off and the month is shifted to the next highest rate.
At first, until I worked the numbers myself that it would tough to pay off that much debt and still come up with time savings on the mortgage. In effect the user had plenty of discretionary income, just not in the first few years. The real kicker to the mortgage was once the car and CC’s got paid off, those funds were free to really work on the mortgage. The key is that the user doesn’t take on new debt after the car and CC’s are paid off.
It took me about 15 minutes to create the three amoritization schedules and then adjust the payments so the monthly debt service was always the same to meet the assumptions of the challenge.
Where has James been lately?
Austin, Texas, He’s “Austin’s Best Lender”.
http://www.austinsbestlender.com/
Scott
1) Please go back and PUBLISH your spreadsheet and make it public, view-only.
2) Interest cancellation does work, but not to the extent that MMA agents lie about and MMA clients believe. The maximum cancellation that can occur in any month is equal to: (take home pay) * (HELOC APR) / 12. In other words, if a client takes home $5000 and his HELOC APR is 7%, his maximum interest savings is $29.17 a month. In other posts, MMA agents has written that the average client is only able to offset 30% of their HELOC balance each month, meaning, in this example, only $8.75 and would pay HELOC interest of $20.42. If the mortgage interest rate was 6%, the interest paid would be $25. So you are seeing a savings of $4.58 per month using IDEAL interest cancellation.
But that is not how MMA works. Through masterful redirection, MMA makes large transfers every few months to pay down the mortgage. Clients see immediate results. They never stop to calculate the mortgage interest they would have paid vs. the HELOC interest they are actually paying. They are only told about the interest they are saving overall. Because MMA uses discretionary income to pay down the HELOC and not the mortgage, the lump sum used to pay the mortgage has to be equal to the monthly take home pay, plus the greater value of all paychecks deposited into the account in one month, plus 2 or 3 months of discretionary income payments.
mma user
Congratulations on your life
I wish I could escrow my own property tax and insurance, but I would have been charged another 1/4 point on my mortgage rate. It must be nice to have all this extra money, discretionary income, what ever you want to call it. This income powers all your mortgage pay downs. Having a HELOC interest rate below your mortgage rate helps automatically. Having paid so little interest so far on your HELOC tells me that you started MMA out-of-cycle with your HELOC. Tell us what your average daily balance is in a month.
As for doing nothing different, I assume you are not contributing any more money to your holding account, and are also using the holding account money to pay down the mortgage. So, what you are implying is that your financial situation is in order and you are not dependent on this extra cash coming in. You, my friend, are the exception, not the rule. Yet, you say that you were loathe to use this extra money and commit it to paying down your mortgage. And if you apply these same numbers using a mortgage calculator, you said that you couldn’t match the MMA performance.
I did not see the option for “public view”. I looked several times when I “published” it. Maybe this as .html option will be available to you.
http://spreadsheets.google.com/pub?key=pX0OcvF_IKpGIwVE7b5dnAQ&output=html
Scott,
Since I posted the details of my information I am hoping mma user or James Barnes or someone who is using product can do the analysis. No, I have not talked to any agent about this. I just am reading and hearing information. Some agents did try to contact me, but I said no. I want to see both sides and not be persuaded by tricks for either side and not hear that other side is shill or liar. The way I read most of this I see as typical American culture to put other person down. I prefer to keep this just to deal with product and with facts Nobody is perfect and nobody is math genius so many people like me need help, but please do not think I am dumb. Maybe you know more about this than I do but I am sure I probably know more than any of you about some things.
Bonhoeffer,
The only way that the UFF software could save even slightly more then doing it yourself the easy way, is if it cost $0, or the HELOC APR is less than the mortgage APR. Remember the HELOC approach that the UFF software utilizes at best saves between $20-$30/mo. However it is much more likely it will only save between $5-$15/mo. Since the software costs $3800, this small savings does not make up for the cost.
As you have seen, the people on this site and others that have run the math figures have advised not to buy UFF. The only ones that are promoting the product are the ones that are selling it. They are promoting it not because it is a good product, but because $2500 of the $3800 cost goes towards commission.
The reason I have been hostile against the UFF salesman is because they are taking advantage of people who don’t understand mortgages.
The UFF company reminds me of a show I watched on CNBC: http://www.cnbc.com/id/23240841
Buying UFF is like paying for an oil change at Jiffy Lube and instead of them doing it for you, they make you do it and show you how. Instead of charging you $25 for the oil change, they charge you $3800 for the 20 minute lesson, and claim that now you can save thousands more by changing your own oil from now on! Jiffy Lube then tells you that changing oil is much to difficult to do on your own and without their secret lesson, you wouldn’t come close to the results that they teach.
Hi Bonhoeffer,
As a freind of mine said “nobody gets all the marbles”, or in other words, there will always be people who have more smarts in some subjects than you. I’m sorry if I presented myself in a way that sounded arrogant to you. That was not my intention.
I’m always open to new information.
Scott
Scott,
No, I am sorry. I was not talking about you in specific. I was talking about when I read in the discussion boards in general. We will see if someone can do the analysis. I don’t hear from mma user or James Barnes so maybe the analysis cannot improve on your numbers. Thank you for answering me.
Bonhoeffer,
According to my calculations, if you started your mortgage in Jun 05, you should have a balance of about $146,000. If you apply your $718 each month to pay down the mortgage, you should be done in 124 months, a little more than 10 years. If you use your $4400 savings, you shorten the time to 121 months.
If you were to do a proper HELOC shuffle, you would only save another $2,000, only if interest rates hold. Keeping this in mind, MMA costs $3500 and would end up costing you much more money plus interest.
JimmyyDaGeek No my balance is not $146,000. It is $176,970.67 for August statement. Where did you get extra almost $31,000 paid to principal since June 5, 2005.
JimmyDaGeek one more thing. You said your calculations gave you that I my balance is $146,000. How did you do your calculations since they are not the same as what my balance actually is.
Bonhoeffer~
I can’t do an analysis for you. Only an MMA agent can. They do it for free, you just have to contact them and fill out information on a website. That’s what I did. I am not selling the product and I don’t want anyone to think I am, so I’m not going to go into any more detail. I am a just a regular person who bought the software. I have only been using it for 1 month. I was really excited about how it was working for me and wanted to tell others how great it was.
However, after reading through the posts on this board, I’m finding out that maybe it good for me, because of my financial situation. Maybe its not so good for others? Especially if the $3500 is a hardship to come up with. For me, I believe it was a good investment. I needed the peace of mind and security of knowing that even though I’m borrowing plus leaveraging money its working for me. I couldn’t do it on my own. I couldn’t devise a way to “see” what would happen in future months. I don’t possess the math skills. With this product I will pay my mortage off quicker, but folks like JimmyDaGeek may have a much better plan for you.
I don’t feel like the software is a scam. It definitely works. But, what I have learned her is, it is possible to do it yourself, as long as your disciplined. For me, I wanted to leverage my money. I couldn’t come up, on my own, a plan to do it myself. So, for me this purchase was worth it. I was excited and wanted to help others, that was my only intent.
JimmyDaGeek,
To answer your questions:
“As for doing nothing different, I assume you are not contributing any more money to your holding account, and are also using the holding account money to pay down the mortgage. ”
(#1)Yes, I’m not contributing to the hoding account any longer. (#2) Yes, I guess I’m leveraging that money in some fashion to help pay down my mortgage. BUT, I don’t feel like I could have just used that money for extra principal payments because then what do you prosose I should do when my property tax or car insurance comes due? That’s why I “loathe” to pay the extra money towards the principal. Because the “extra” money really is only “extra” until the annual bill is due. On my own, I couldn’t figure out how to handle this…
“Having paid so little interest so far on your HELOC tells me that you started MMA out-of-cycle with your HELOC. Tell us what your average daily balance is in a month.”
(#3) I looked at my most current statement and I can’t seem to locate where the average daily balance is calculated for me. My statement is from 7/12 to 8/12. It lists transactions and a finance charge, but no average daily balance? Is there a way to calculate it? Total Finance Charge is: $18.54 My first draw on the HELOC was on 7/21 for $7000. But, do keep in mind that money DID NOT go to pay off my mortgage. I didn’t start using the MMA Software until around 8/4. So does this mean I’m “out of sync”?
“And if you apply these same numbers using a mortgage calculator, you said that you couldn’t match the MMA performance.”
(#4) I’m not sure what you mean by applying the “same numbers”, but what I did do was to take my discretionary income ($500) and apply it each month to the mortgage as principal. I used the calculator and assumed I had paid $500/month extra to principal from the start of the loan until the end. It only shortened my term by 3.2 This didn’t beat the years til payoff of the MMA. I played around with the mortgage calculator and found out I’d have to pay more than double per month to principal in order to equal the MMA. That’s why I was sold on the product. Where did I go wrong?
Scott says:
“Borrow say $5000 from the HELOC to prepay your mortgage at 8%. Pay the HELOC back over the course of one year. Say you have $200 in interest costs from the HELOC.
Now the people who want you to believe that was a good decision say “look $200 in interest saved you $13,000 in future interest on your 6% loan!” The $200 in interest did not save the $13,000 in interest, it was the $5,000 prepayment that you made over the course of 1 year!”
Of course the $5000 (of principal payment) was what saved the $13,000! No argument there! But the rest of your argument is flawed….
1. No one who uses a MMA account “pays back the money borrowed” over the course of the year! Instead, they borrow from the HELOC, pay the principal down with the money they borrow, then deposit all their monthly income into the account to help keep the balance on the HELOC as low as possible.
2. By keeping the balance on the HELOC as low as possible, the individual is able to pay LESS interest overall.
3. Everyone who owns a home with a mortage pays interest each month. The trick is to leverage money from the HELOC to save TOTAL interest for the month.
4. If you had to pay $200 total in interest on the HELOC, but paid $25000 less in interest over the course of the loan, then it should be worth it shouldn’t it?
Bonhoeffer
Your number is correct. I should have gotten it after 39 payments.. I think I left a prepayment number in my calculation.
Anyway I reran the prepayment calculations. The regular payoff is in 134 months. Subtract the savings of $4414, too, and the payoff is reduced to 129 months. The HELOC shuffle savings is about $2000, assuming no change in the 4% interest rate. I ignored the intro rate.
WhackAShill I think you are right if as you say the UFF salesman is taking advantage of people who don’t understand mortgages. I would agree with you. But do you also agree that finance investment firms, banks, mortgage brokers, money market brokers, and these people also take advantage of people who do not understand finance and how money works. I know that is how banks make money. They make loans and charge high interest. Car dealers do this too. They take bigger advantage of people with not good credit and even make them pay higher interest. To me I think this does more damage to people and makes a lot of people go bankrupt or have to do foreclosure. I don’t know so much about this but based on the discussions I do not see that these UFF salesman are making people go bankrupt. It seems like they want people to get help from what I have read.
I think I could do the oil change myself for the rest of my life and save money if I live 40 more years to age 85 and did not have to buy the oil filter or the oil. I don’t know about you, but JIffy Lube always finds something else wrong with my car and they want to charge me to fix that too so I think I might save even more money, especially since I will pay more than $25 for most of those years with inflation even for oil changes. That’s like my bank and my mortgage company who keeps sending me papers to tell me I need to buy mortgage insurance or accidental death insurance or disability insurance or take out a second mortgage or something else that will make me even more dependent on them. Will you care to comment on these things, WhackAShill or do you think only UFF agents are shill.
mma user
#1,2: If the money you put into the holding account is not considered an expense by MMA, it will be used to pay down your mortgage. After all, income – expense = discretionary income. As for accumulating money to pay infrequent bills, one trick that people use is to accumulate money in a checking account or to transfer it directly to a separate savings account. When the bill comes due, the money will be there. For example, ING Direct lets you create different savings accounts and name them. You can then automatically transfer money into each account. Just a thought.
#3: You said the HELOC closes on the 12th of the month, and your first draw was on the 21st before. That’s 3 weeks and your interest should have been higher. If you can’t find the average daily balance, then it becomes a chore to calculate the balance each day. I won’t pry further.
#4: You are right, $500 is paltry. You said that your bills have not changed to a great degree, but you are no longer putting money into your holding account. Where do you think MMA is getting the money to make extra payments to your mortgage? You also mentioned that you made a $7000 draw on your HELOC before starting MMA. If you were paying off a debt, that former payment is freed to become discretionary income and MMA uses it.
You said you were posting because you thought MMA was a great product. I keep posting to open people’s eyes to what MMA is really doing and what its costs are relative to doing it themselves. It probably spooks people to see the spreadsheets, but I offer them to show the cash flow. They only need lined paper and a pen to do it on their own. If they still want to pay $3500 to organize their finances, that’s their business.
Bonhoeffer ~
What a great post. You made a lot of great points about the Jiffy Lube/ Oil change senario. You have a sharp mind and totally rebutted what was presented as a bad actually turned out to make sense if you think it through. That’s my sentiments exactly on the MMA software. It can work….
Bonehoeffer said:
“WhackAShill I think you are right if as you say the UFF salesman is taking advantage of people who don’t understand mortgages.”
Thank you Bonehoeffer, you are starting to understand that this system is a scam. I truly believe that now that you understand this, you will not buy the UFF program.
“I would agree with you. But do you also agree that finance investment firms, banks, mortgage brokers, money market brokers, and these people also take advantage of people who do not understand finance and how money works.”
I agree that some are dishonest and are thief’s, however, many are not…… The main difference is that many of these people can help you save/make money, where UFF can’t save/make anyone money. UFF can’t outperform simple prepayment. Not one UFF agent can save you more money compared to simply paying more money when your monthly mortgage statement comes.
“I know that is how banks make money.”
The majority of banks do not make money by screwing people. UFF agents make money by screwing people. Banks make money by lending money to people. There is no hidden agenda, banks for the most part disclose all pertinent information to borrowers.
“They make loans and charge high interest.”
While banks do make money on interest, at least they disclose the interest rate and all that information up front.
UFF claims that they save you hundreds of thousands of dollars, when in actuality, it is the “clients” own money that is saving the money.
UFF attempts to complicate how mortgages work, in order to validate their complicated “interest cancellation” program.
Bonhoeffer, as you have now seen the math, it is much easier to skip the interest cancellation HELOC that UFF would have you do, and instead just send extra money with your regular mortgage payment as it comes each month.
“Car dealers do this too. They take bigger advantage of people with not good credit and even make them pay higher interest. To me I think this does more damage to people and makes a lot of people go bankrupt or have to do foreclosure.”
I agree, car dealers are the worst. Thats why I pay cash for all my vehicles. But Bonhoeffer, were not discussing car dealers. We are discussing how UFF agents scam people out of $3800 for a useless product.
“I don’t know so much about this but based on the discussions I do not see that these UFF salesman are making people go bankrupt. It seems like they want people to get help from what I have read.”
It would appear that UFF is attempting to get people out of debt. However the reality is that UFF charges $3800 for a product that is not needed and has no value.
The product that they sell is a complicated version of pre-paying your mortgage. Something that anyone can do better then the UFF program by simply sending in whatever money they can each month in addition to the regular mortgage payment.
“I think I could do the oil change myself for the rest of my life and save money if I live 40 more years to age 85 and did not have to buy the oil filter or the oil. I don’t know about you, but JIffy Lube always finds something else wrong with my car and they want to charge me to fix that too so I think I might save even more money, especially since I will pay more than $25 for most of those years with inflation even for oil changes. That’s like my bank and my mortgage company who keeps sending me papers to tell me I need to buy mortgage insurance or accidental death insurance or disability insurance or take out a second mortgage or something else that will make me even more dependent on them. Will you care to comment on these things, WhackAShill or do you think only UFF agents are shill.”
Bonhoeffer, a shill is someone who claims no affiliation for a product, but in actuality they are somehow employed or related to the product.
An example would be:
your watching an infomercial on TV about a great hunting knife. They make it look like the best hunting knife you could buy, all of a sudden they show a person who already bought the knife and that person thinks its great! This person tells his story about how this knife is the best knife he ever used and it can cut anything and everything! Well, guess what, that person who is telling you all those great things actually is a salesman of the knife!!! Of course he lied because he wants you to order the knife!
You later find out that the knife is terrible, it can’t cut through anything!
This person who promoted the knife is by definition is a “shill”, he claims no affiliation to the knife company, and yet he has a direct relationship with the company.
When I “name called” earlier, I was simply pointing out those who were affiliated with a company and yet claimed that they were not. I did this to notify others not to trust these people because they had anterior motives (to promote and sell the UFF product)
Perhaps the jiffy lube definition was a little confusing for you. Let me give you another one:
You are in an apple orchard and you have the choice to either buy one rotten apple for $50 or go pick a dozen fresh/good apples for $5.
Would you buy the rotten apple or the dozen fresh ones?
Buying the rotten apple is like buying the UFF software. You get an inferior product and you pay too much for it.
Buying the fresh $5 apples, gives you more for your money, and a better product then the rotten apple.
JimmyDaGeek says,
“You said the HELOC closes on the 12th of the month, and your first draw was on the 21st before. That’s 3 weeks and your interest should have been higher. If you can’t find the average daily balance, then it becomes a chore to calculate the balance each day.”
Well, maybe my financial institution could tell me if I called them. It was my belief though that my interest was so low because the avg daily balance was quite low. The statement runs from the 12th to the 12th. I drew my inital money on the equity line, on 7/21 then another draw on 7/23 was made. At that point my balance was near its high. However, on 7/25 and then again on 8/8 I made two large payments which reduced the balance by almost 2/3. Then, roughly 3 days later I made a large draw. The balance went up to its all time high and then the statement cut.
My discretionary income is $500, but the “Long Term Bills” money was $1000.00/month paid out here and there over the course of a year. This is the money I speak of going into a holding account. Yes, it is considered an expense by the software. The “holding account” was a no-fee online checking account with the same institution as my primary checking. I couldn’t use a savings account because they have strict rules about how many withdrawls you can have and minimum balances. ** However, the main point I was trying to make was before buying the software, this money wasn’t doing anything for me just sitting there all year waiting for me to have to pay a long term bills. Now, with the MMA software, I feel like that money is somehow helping me to pay down my mortgage. Am I wrong? **
The $7000.00 was used to pay off a debt. But I accounted for that additional money in my MMA analysis. When they do the analysis, they figure out how many years you can save on your mortgage by asking you to provide your income, your expenses and your discretionary income/month.
MMA software user said:
“What a great post. You made a lot of great points about the Jiffy Lube/ Oil change senario. You have a sharp mind and totally rebutted what was presented as a bad actually turned out to make sense if you think it through. That’s my sentiments exactly on the MMA software. It can work….”
MMA software user,
let me start by saying that it has been my experience in life that people are reluctant to admit that they paid too much for something, or that they got scammed. It comes down to pride and generally, people do not like to admit that they are wrong.
having said this, by analyzing the math that the UFF product uses, and the math that simple pre-payment uses, I find your statement to be true. UFF does work in that it can help a person pay down their 30 year mortgage in less time than if they did nothing at all.
The problem that I have with the product, is that if that same person took 5 minutes to do the math, they could easily figure out that it would take them less time/effort to do it themselves, saving $3800 on software cost, and not only do it faster, but take less time and effort, and save more money by doing it themselves.
UFF agents lie and make it seem difficult to do it on your own, this is not true, its truly simple.
UFF agents are deceptive, they attempt to make it seem like the HELOC is saving a whole lot of money but it actually is not. The UFF program is taking money out of the persons paycheck and putting it towards the mortgage. This is what actually saves them money, not the “interest cancellation.” The interest cancellation only saves a couple of bucks each month. This is something that anyone can do without the UFF software, but generally isn’t worth the effort because its only a couple of bucks.
It is not complicated to outperform the UFF software, just take the money out of your paycheck that you think you can afford and put it towards the mortgage.
MMA software user and Bonhoeffer: If you dispute any information on this post or the one above, please address the specific statement that I made. I truly believe that all of the information I post is correct and perhaps I can further address something if you still do not understand.
Thank you.
-WhackAShill-
Bonhoeffer says,
“Please clarify. I understand the difference between semi-monthly and bi-weekly payroll in calculating annual income, but it look to me like the way the MMA software works is that you put in your paycheck intervals and it automatically calculates and divides that by 12 so your monthly income vs. monthly expenses is true. I’m paid weekly. Will this system work for me? I don’t understand what black box solutions means. All I know is that I can get a line of credit for under 5% and my mortgage interest rate is 7.5%. Will I save money and pay off my mortgage faster with about $900 in extra money every month, or should I just put that money in savings and get less than 2% interest? I’m already maxed out on what I can put in my 401k. Thanks.”
————————————————-
I have a few points which I need you to clarify for me:
1. Are you able to say what your term is on your loan and how many years (represented in months) you have left to pay?
2. When you say $900 in extra money each month do you mean that is the dollar amount left over after you pay all your bills and take care of your living expenses? If the answer is yes, MMA people would call that dollar amount “discretionary income.”
———————————
If you really have $900 in “discretionary income” and you make a decent salary the software would probably work well for you. The software doesn’t really care if you are paid monthly, biweekly, weekly etc. It will work no matter how a person is paid.
What I have learned from this message board, though, is the question you need to ask yourself is can you achieve the same results as the MMA or better by doing it yourself? You should be able to see what you can do yourself with a simple on-line mortgage pre-payment calculator. I can give you a link to one if you need one let me know. You just need to plug in your original loan amount, your loan term, your interest rate and the extra $ your plan to apply to principal each month. It will then tell you how many years(and months) the extra principal payments will save you on your loan. (for me I had $500 in discretionary income and if I plugged in paying $500/month to principal into the mortgage calculator it didn’t save me as many years as my MMA analysis said I would save – so I bought the software).
In order to figure out how quickly the MMA software claims to pay off your loan you need to contact any MMA rep and have them do a free analysis. Its a pretty painless process. I did it and it didn’t take much time.
Once you have the MMA analysis, then you just see if its feasible for you to beat there time frame on your own, if it is, just make a plan and stick to it. If it isn’t and you want to pay the $3500 fee, then buy the software. The great thing is, you hold all the cards and you get to decide.
What may work for one person, may not work for another. Each individual has different circumstances and from what I’ve learned it is possible to do it yourself, but I also strongly believe, the MMA software isn’t a scam. It will work too! However, is it worth it to YOU to pay the $3500 fee? It was to me…. but I’ll let you decide based on your individual situation.
-WhackAShill- says,
“It is not complicated to outperform the UFF software, just take the money out of your paycheck that you think you can afford and put it towards the mortgage.”
Sigh, I have already said on numerous occasions, the reason I bought the software was because when I took my $500 in discretionary income and I plugged it into the mortgage prepayment calculator it didn’t save as many years as the MMA analysis said I would save. So that’s why I purchased the software. It appeared to me, by doing it on my own, I couldn’t do a better job.
But, that’s just my situation, like I’ve also said before, if folks out there can beat the system on their own without paying the MMA fee, than by all mean, do it! It makes sense!
The only reason I started posting here is because I am a real person who uses the software. It seems to be working for me and I was excited and wanted to share my good fortune with others who may similarly benefit.
MMA Software User said:
“However, the main point I was trying to make was before buying the software, this money wasn’t doing anything for me just sitting there all year waiting for me to have to pay a long term bills. Now, with the MMA software, I feel like that money is somehow helping me to pay down my mortgage. Am I wrong?”
While this money might be helping you slightly to pay down your mortgage, it is not helping very much.
The $3800 fee that UFF charges negates all the savings that you would see from having this money “work for you.”
The money that was “sitting in your account doing nothing” is now working for you, but it only saves you a couple of bucks each month. The huge fee that UFF charges is just too much, you can’t save enough to make this money back.
The reason that the UFF analysis shows that you can pay your mortgage off in a significantly lower amount of time is that it takes into consideration your discretionary income, and pays all of this income it towards your mortgage. This is something that you can do for free and not be charge $3800 for. All you have to do is pay whatever you can in addition to your normal mortgage payment. There is no trick to it!
MMA software user:
“Sigh, I have already said on numerous occasions, the reason I bought the software was because when I took my $500 in discretionary income and I plugged it into the mortgage prepayment calculator it didn’t save as many years as the MMA analysis said I would save. So that’s why I purchased the software. It appeared to me, by doing it on my own, I couldn’t do a better job.
But, that’s just my situation, like I’ve also said before, if folks out there can beat the system on their own without paying the MMA fee, than by all mean, do it! It makes sense!
The only reason I started posting here is because I am a real person who uses the software. It seems to be working for me and I was excited and wanted to share my good fortune with others who may similarly benefit.”
I think I might understand why your $500 discretionary income that you are plugging into the calculator is wrong.
If you have any debts, credit card debts, car loan debts, etc. these debts will be paid off sooner than your mortgage. After these debts are paid, UFF would take the payments to these creditors and send even more payments towards the mortgage.
Your discretionary income would go from $500 to a higher amount after these debts are paid.
It is impossible to overcome the software cost, the money saved by the “interest cancellation” just cant cover the cost, this is why I do not like the UFF system.