i am reading about these new money merge acts that are supposed to take off yrs of your mortgage payments and save you tens of thousands of dollars by reducing your debt and the interest on your mortgage.

i have an mba and it is too complex for my mind...anyone heard of this and does it work? anyone?

This is addressed elsewhere in the forum but basically you are paying a substantial fee to have someone help you pay your payments on a specific schedule. They have you borrow against your home's equity to accelerate payments bi-monthly on the mortgage while allowing the "float" of a thirty day credit cycle on the HELOC to be erased by your paycheck deposit, before the interest comes due. The concept is all about the different types, and ways interest is charged. I am a bit skeptical even though it seems to make some sense. I think banks are smart enough to close this gap if it exists.

I've seen first hand that the MMA is working for people. The banks can't close a gap because they dont have access to the MMA. One of my close family friends just signed up for the service and she was trapped in a negative ARM and she will now have her house paid off in 12 years rather than 27 and will save $197,036 in interest payments rather than drowning in her mortgage payments.

Its pretty phenomenal.

It's a house of cards waiting to come down though, one missed payment could screw up the whole works. If you can afford your mortgage now, start throwing a little more into the payments every month ($5-10 more a month increasing a little every month) That will pay the mortgage off faster rather than stretch it out with a home equity loan. (shifting debt)

It is by no means a house of cards waiting to come down. The MMA comes with a money back guarantee. I can understand you being skeptical - I was too at first - but now I see how it is helping people and the results are fantastic.

The MMA doesnt shift your debt onto a home equity loan either. You should investigate it further to find out how it really works - it may surprise you.

I think it's also important to remember that perhaps paying your mortgage off faster is not the best use of your money. Agreeable markets at this time are extremely volatile, but over the course of a theoretical mortgage I think extra money might be better used if invested.

MMA's do work I do them for clients and see the results. Fact is after 10 yrs in a 30 yr fixed you are paying daily interest off almost the original amt borrowed vs paying daily interest off an MMA acct which could be 1/3rd of the original amt or less. Also leveraging your excess monthly "float" and saving funds in your MMA acct instead of earning 1% in a checking acct. (your home is your savings and checking acct through your MMA). A 30 yr fixed is not in your best interest. Lenders know that the avg that people keep them is 5-6 years and then you go out and get a new one, etc, etc. They put you in a position that you will never pay off your mortgage and keep your funds tied up in a check/savings/bond accts at super low rates while they turn around and lend it to you for 6-7% and "milk" you of your potential earnings in the 30 yr amortized mortgage vehicles.

Hello all...I new to the forum so please easy on me...I was told by a co-worker today about the MMA, curiosity had me doing some research and I came accross this forum....very skeptic...but after some reading...sounds like it can be done....for sure the tracking would be an issue.....but Im sure not that difficult to put together on an excel sheet or access. Wondering if this can also be done to pay off anything else like cars....just like the snowball effect..start paying off small loans and work my way up to the mortgage and then be able to apply alot more money towards the principal....your thoughts?

Hello,

Welcome to the forum. You can use the techique to pay-off cars, etc. the key is to have a line of credit type loan that you are only paying daily interest off of what the current balance is.

Example: you purchase a car with your heloc for 40k, so now your daily interest is calculated off of 40k. Once your paycheck comes in you deposit the whole amt into your heloc acct, let s say it's a $6k paycheck -you deposit and pay down the heloc.

While your paycheck is in the heloc acct you are leveraging your own money to save from paying on the entire $40k that was orig owed, now your daily interest owed is off of the new amt: $34k (temporary). Later on in the month you pay your bills out lets say for 4k out of the 6k deposited from your paycheck, now your balance goes back up to $38k- you are now paying daily interest off of 38k (not 40k). Keeping your 2k in your heloc instead of earning 1% in a savings acct -you are saving 6% or ? from the amt owed from your car purchase.

Next month comes and you get another $6k paycheck again and deposit it in your heloc acct, now your balance goes down to $32k from $38k while you are floating your paycheck in there, finally bills come out and you keep another 2k savings in again now your balance adjusts back up to $36k- you are paing daily interest off of $36k not the orig. $40k. Next month same cycle new bal ends up at $34k and so on and so on until your car is paid off. Significant interest savings are starting to accumulate.

This is ideal for a home because on a 30-yr mortgage you are being charged daily interest off the full balance every month instead of paying off the lowered adjusted heloc balance every month. People after 10 yrs are still almost paying off the full balance on a 30yr instead of paying off of an adjusted amount that could be 50% or 85+% of the orig. amt borrowed daily interest off of 300k vs 150k or less starts adding up significantly).

Another thing to consider is your monthly payment obligations go down every month too- a payment on 300k for the 30yr loan vs the adjusted paid down amt of 150k or less on the heloc realizes a significant lower monthly payment obligation.

Banks are slowly robbing you of your money this way (with a 30yr mortgage and floating YOUR savings and checking deposits).

The fundamental issue is you leveraging your own funds/ deposits for your own cash "float" intead of the banks using your cash "float" and lending your money out at higher rates.

I can provide more details to help explain if you need them.

MMA's are not a scam, but they are far from the magical financial tools proponents make them out to be. There are 2 "engines" working to save you money with the MMA strategy. The first engine is the actual interest you save because your entire paycheck pays down principle, then you slowly draw it back up as needed through the month. The second engine is the effective extra payments you net against your debt each month. Look at Impact's example, this is a common scenario among those selling MMA's:

Notice how $2k has effectively been paid against that car loan in the month. Maybe the required payment was $500 dollars, so you're paying an extra $1500 each month to pay down the loan.

So, which of these engines is more effective in accelerating debt payoff? I think the interest savings amount to a few 10's of dollars a month at best. But the $1500 extra payment each month accounts for the vast majority of the acceleration in debt pay down. And, anybody can make an extra payment like this without signing up for an MMA.

On the positive side, an MMA strategy does bring a sense of structure and commitment to people, and for some, that makes all the difference.

KSluis - DueMinder
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