Loan payoff in 6 years??? - Posted by Mich_Mike

Posted by Anonymous on January 29, 2007 at 05:12:14:

Ed, obviously you don’t seem to understand this MMA program. I suggest you do more research on the power of the HELOC.

Loan payoff in 6 years??? - Posted by Mich_Mike

Posted by Mich_Mike on December 08, 2006 at 09:34:02:

Hello Ed. There is a company that I assume is using money lent to them as hard money or their own investments. They claim to be able to pay off your mortgage between 4-6 yrs depending on the amount you lend them (25%-45% of value of home). There is a lengthy “Self amoritizing conditional payment” contract that you must agree to.

Here is what the company says. I have removed the name to prevent any slander/liability issues.

With any regular mortgage, it’s a fact that after 8 to 10 years, you’ve actually paid for your home. (The rest of the 30 years is all interest!)

The longer your loan is stretched out, the more you pay. When a loan is amortized for 30 years, you will pay up to 4 times the amount originally borrowed!! That’s why we offer you the 5 YEARS TO payoff program.

To qualify, you would need to have at least 25% equity in your home, or have that amount in cash. You would refinance your home if you need to access your equity, then you’re ready to enter into the 5 YEARS TO payoff program. Company can assist you with your refinance, or you can use any mortgage broker/company that you’re comfortable with.

During the first 6 months, you have NO PAYMENTS!

Then your new mortgage payments are cut in half! (not including taxes and insurance).

At the end of the 5th year … PAYOFF! Your mortgage is PAID IN FULL! No liens!

I subscribe to the “too good to be true” school of thought. I would like your opinion.


Re: Loan payoff in 6 years??? - Posted by Peter

Posted by Peter on December 14, 2006 at 08:34:59:

This looks and feels like BS. I contacted the company, and still haven’t heard back from them. The website is somewhat misleading, and the biggest risk you face is ‘simply’ the people managing your money not getting the type of return on it they thought, and you don’t get ahead.


Posted by Eva Morgan on December 11, 2006 at 01:18:13:

The Money Merge Account (MMA) is a web-based software program that is designed to accelerate the payoff of a compound interest mortgage by utilizing a Home Equity Line of Credit (HELOC) as an everyday bank account. The HELOC (addressed as an ?Advanced Line of Credit? [ALOC] by U1st) is a second mortgage secured against the equity in a home or other mortgaged real estate. It is necessary that the ALOC have specific flexible characteristics, and specific features associated with it, in order to work the best with this program. A fixed second mortgage will not work with the MMA program. As long at the ALOC possesses the correct structure, the institution that provides the ALOC makes no difference.

Through a consistent pattern of applying all monthly income to the ALOC, and paying all monthly expenses from the ALOC, the MMA software calculates when the owner should make additional principal payments to the first mortgage using the ALOC as the tool to make the payments. It prompts the owner as to ?how much? and ?when? to make these specific payments during the course of the year. The calculations are based on the specific income and expenses entered into the MMA formula. The MMA (and U1st) does not have access to any bank accounts, mortgage accounts or personal property of any kind. The software simply monitors the data entered by the owner monthly, and then makes its recommendations based on that data. At strategic times, the system will prompt lump sum payments to be made from the ALOC to the primary mortgage (principal only), which forces the amortization schedule of the first mortgage to automatically re-adjust each time a payment is made. This adjustment occurs regardless of which financial institution holds the first mortgage.

The owner will never need to make a specific scheduled payment to the ALOC, as the income applied monthly eliminates the need to do so. This process also cancels much of the interest that would have accrued on the ALOC. This leaves the owner with more monthly discretionary income, which ultimately determines how much can be applied to pay down the first mortgage at varying intervals, without increasing an outflow of cash beyond the owner?s normal budget.

The balance on the ALOC will not continue to increase as the owner makes periodic lump sum payments to principal because the MMA program recognizes at what point the ALOC needs to be paid down, and it will focus on paying it down with the recurring monthly income that is being applied to it. It is necessary that the owner have a positive cash flow to utilize this program. (Even a small amount will make this program work. The more there is, the faster it works.)

When the balance of the ALOC is sufficiently reduced again, it will prompt for additional payments to be made towards the principal on the first mortgage, and will continue to do so until the mortgage is paid off and the line of credit has gone to a zero balance. The program is affected by changes to cash-flow. The more cash in, the faster the mortgage can be paid down. The more monthly expense, the slower it will be paid down.

This program provides that standard fixed and variable mortgages (even interest only and negative amortization) can typically be paid off in 1/3 to 1/2 the time vs. the average twenty-three year payoff using a bi-weekly plan. This is accomplished without changing the owner?s monthly cash-flow, and without an actual increase to the monthly mortgage payment.

Following the MMA program?s recommendations will make a noticeable difference immediately on the principal balance. The owner will typically be prompted to make payments early in the process (unless the line has a high balance already) and will see quick results as compared to traditional amortizations in which most early payments are mostly to interest. Using this process the effective interest rate will be reduced substantially.

If the owner chooses to sell the property or refinance the property in the early years, the net effect is that more equity will have been accumulated and a sale or refinance will culminate with more cash to the owner at closing. Furthermore, the MMA program is portable and will follow its owner to all the subsequent properties to which the process can be applied again.

The MMA plan requires that the owner have some amount of monthly discretionary income. An individual with a negative cash flow is not a candidate for the MMA. However an analysis of an individual?s financial situation may discover that those with a negative or marginal cash flow (who can qualify for a HELOC), may be able to restructure their debts, and free up enough cash to make the MMA program work for them. As long as there is some discretionary income, it will work.

Re: Loan payoff in 6 years??? - Posted by Ed Garcia

Posted by Ed Garcia on December 09, 2006 at 10:52:56:


I?m afraid that this is a perfect example that figures don?t lie but liars can figure.

In this case the liar figured wrong and the numbers don?t work.

Yes it?s true that if you keep a loan out for 30 years you?re going to pay more than double what you?ve borrowed depending on your rate. For example if you borrow $100,000 for 30 years at 6% your mortgage payment would be $599.55 and your pay back over 30 years would be $215,838.

However if you cut your payments in half which would be $299.78 and multiplied it by 72 months (6years) your payback is $21,584.16 which don?t work.

Let do what they?ve suggested. Let?s finance only 75% of the $100,000 with 25% down.
Now our balance is $75000. Our payment for 30years would now be $449.66 X 30 years our payback would be $161,877.60. Forget about the 6 months no payments if you take the original payment based on $100,000 balance and pay it back for 6 years your pay back is still $21,584.16. If you pay back the $75,000 in 6 years with no interest the payment would be $1,041.67 per month, so you can surely see that the numbers don?t work.

Mike, it reminds me of a story.

A businessman was going to hire someone to run his business and wanted to understand their perception of reality. He first interviewed an Accountant and asked the Accountant what was 2+2. The accountant immediately answered, sir, 2+2= 4; I answered this with no hesitation.

He then interviewed a Financial Analyst and asked him the same question. He said sir, 2+2 can vary depending on the market place and the intention of the user. It could formulate to 3.5 but not exceed 4.5 depending on the market, conditions, intent and usage of status information and of course is subject to change.

Last but not least he interviewed and Attorney and asked him the same question.

The attorney quietly closed the door to the office, walked over and shut the blinds on the windows, and leaned over and whispered into the businessman?s ear, what do you want it to be?

Mike, I hope I have now some what verified your suspicions.

Ed Garcia

Re: Loan payoff in 6 years??? - Posted by Brian (WA)

Posted by Brian (WA) on December 08, 2006 at 18:39:47:


Make no payments for the first six months??? Then your payments are cut in half??? Something is wrong with that picture or am I just missing something?

However it is true that you can pay off your mortgage in 3-10 years. Go to this website and check out the information, use the cashflow calculator to plug in your own scenario.

See how you can turn your properties into your own bank in the real estate investing page. Make sure you read the asher report too.