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I recently read about a money merge account that can help you pay off your mortgage early. I am confused as to how this works. I think that you have to purchase some sort of software and deposit your income into a HELOC account that has a variable rate. Please educate me on this. Thank you for your advice!

Signed—Woman seeking to pay off her mortgage early.


Damon Says:

When it comes to “ice cream” I encourage you to try any and all of the flavors. When it comes to “financial products”—including, mortgage, insurance and investment products, I admonish you to stick with “plain vanilla”! If any financial product being offered sounds overly sophisticated or too good to be true, you should be SCARED—for someone is trying to “siphon money” out of your wallet!

The new and fast growing “Money Merge Account” that came to the marketplace in June of 2006 is no exception! P.T. Barnum said that there’s a sucker born every minute. Don’t let that sucker be you!

What is a Money Merge Account? There are three major components to a Money Merge Account:

•Your primary mortgage

•A home equity line of credit (HELOC)

•Money Merge Account Software

With a Money Merge Account, the homeowner would set up a home equity line of credit (HELOC) to be used like a checking account. The “theory” is that instead of letting your money sit idle in a checking account earning no interest. You should use the functionality of a HELOC loan to manipulate cash-flow moving in and out of the HELOC loan in a way that you’ll be able to apply extra payments to your primary mortgage. The extra payments toward your mortgage will allow you to pay off the first mortgage in eight years as opposed to 30 years. The functionality they’re referring to regarding a HELOC loan is it’s a revolving credit arrangement. You can borrow, repay, borrow, repay up to the credit limit. In other words, it’s a super-sized credit card that’s a lien against your home.

You enter your income, expenses and details of your first and second mortgage into the Money Merge Account Software. The Money Merge Account Software will prompt you to the penny on how much and what date you should apply an extra payment to your first mortgage. The “theory” is that a HELOC loan is calculated on the average daily balance. Given the fact you’re constantly depositing your paycheck into the HELOC loan you’re reducing your average daily balance and the amount of interest you’ll pay on the HELOC loan. “Theory”—Software monitoring and budgeting, increased cash flow from interest savings and interest only payment on the HELOC loan will help you consistently apply extra payments to your first mortgage. This will help you pay your first mortgage in record time. I will not go into details of why you should NEVER take out a home equity line of credit (HELOC). That’s not the question you asked. Suffice it to say that a HELOC is one L short of what you’ll be locked into HELL!

The cost of this magical, sophisticated, financial rewarding Money Merge Software that will make your first mortgage disappear before your very eyes at the speed of a bullet is $3,500. Anyone pitching this product has to be bold to have the audacity to sell a product costing $3,500 for the privilege of “borrowing from Peter to pay Paul!

There’s no coincidence that this product is gaining momentum at the same time the mortgage industry is experiencing a mortgage meltdown and the banking industry is experiencing a credit crunch. Falling home prices, a growing number of people with bad credit and no savings, and tighter credit guidelines have forced thousands of mortgage, real estate, title and appraisal companies out of business. Hundreds of thousands of people who reaped their income from the mortgage industry have lost their job. These well-intended hardworking good people need to earn money to feed their family. Many have turned to this multi-leveled modeled “Mortgage Merge Account” business to supplement or replace their income. Of the $3,500 it cost for the “Mortgage Merge Account,” $2,500 is paid out in commission to the people selling this product. Remember it’s a “multi-level modeled.” It could be several people getting a piece of the $2,500 commission.

•Fact: You can indeed pay off your mortgage early if you consistently make extra payments to your mortgage.

•Fact: Your mortgage is typically the largest debt you have and generally carries the lowest interest rate.

Therefore, you’ll be better off attacking credit cards, student loans, and car loans first before paying off your mortgage.

Think with me for a second. If you were to apply $3,500 toward your debt as opposed to buying this software, wouldn’t you have $3,500 less debt to pay off? The truth is they know that most people don’t have $3,500. As a result, they encourage you to get the money from your HELOC loan.

Go figure! They want you to go $3,500 deeper into to debt to quickly get out of debt! That’s double talking!

Do yourself a favor and avoid the Money Merge Account like the plague. If you want to pay off your mortgage EARLY, simply make extra principal payments on a consistent basis.

(Mortgage and Money Coach Damon Carr is the owner of ACE Financial. Sign up for Damon’s FREE online “Ask Damon” e-Newsletter @ http://www.allcreditexperts.com. Damon can be reached @ 412-856-1183.)

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