I have some regret that I have to admit to about these programs. I feel like I failed consumers by allowing them to be misled for far too long. The truth of the matter is that I have done some more calculations, many of which I should have done back before I even posted my first blog about the subject way back in February 2007. The bottom line is that I have now done those calculations and it is time to let the truth out.
Once again, I have simply taken the information from United First Financial's own presentation on their Money Merge Account™ program and run the numbers. Then I ran them again because I couldn't fathom the results. Being as skeptical as I am, I just couldn't believe the results, so I ran them more times and was absolutely astonished at the results.
Over and over again, the results came back with a very clear message:
"MONEY MERGE ACCOUNTS ARE A COMPLETE WASTE OF MONEY AND WILL ACTUALLY COST YOU MORE MONEY NOT SAVINGS"
That's right, and I am sure those UFF agents will want to argue this left and right in trying to defend this product (after all, they want your money), even saying that it's benefits found in the "sophisticated algorithms" go above and beyond the benefits related to the primary mortgage payoff, including that of being able to see the true cost of a purchase (cost plus interest over time, or cost of not investing elsewhere). Try as they may, their own presentation shows its real value, $0.00, actually it costs you.
Here are the calculations once again and how it proves the Money Merge Account (MMA) actually prolongs the payoff and costs you basically its full price tag:
Mortgage: $200,000
Interest Rate: 6%
Loan Type: 30-Yr Fixed
Discretionary Income: $1,000
Quick recap: The United 1st Financial presentation's claim is that the MMA program will pay this mortgage scenario off in 10.4 years and the program costs $3,500.
OK, here is where my calculations changed. All I did was add the $3,500 price tag to the 2nd mortgage payment as extra principal, then simply added $1,000 extra principal (all the discretionary income) each month from the 2nd month going forward until payoff and guess what. Well, since numbers don't lie, here are the results...
UFF Presentation $3,500 Extra Payment Mortgage Payoff 10.4 years 9.92 Years Investments @ 6% $973,000 $1,023,307 Investments @ 8% $1,231,000 $1,306,090 Investments @ 10% $1,575,000 $1,685,967
Run the numbers for yourself, but the truth of the matter is this...MONEY MERGE ACCOUNTS WILL ACTUALLY COST YOU TIME AND MONEY!!!
The arguments that the sophisticated software will payoff over time don't hold water.
The arguments that the software can do a better job than you can on your own doesn't hold water either.
In fact, since you are making your mortgage payment every month already, all you have to do is adjust the payment amount on that check and that's it. If you have recurring payments automatically, you never have to think of anything again. YOU CANNOT GET ANY SIMPLER THAN THAT AND YOU WILL BEAT THE MMA according to their own presentation and facts presented.
So, tell your friends, family, anyone you come in contact with to prevent them from wasting their money on this expensive software. They can do better. You can do better. Of course, I can help you employ strategies that create even more wealth, but this information will help you beat the mortgage acceleration programs.
So, again, please accept my sincerest apologies for not running these calculations and exposing these facts to all of you earlier. I may not have saved everyone from buying these programs, but I may have helped a few people from being ripped off.
(Update for clarification due to some apparent confusion...1) The "2nd mortgage payment is the second payment on the primary mortgage, not a real 2nd mortgage. 2) I do not advocate simply throwing all of your money into your home like the comparison suggests. Of course, if you have been reading my posts for any length of time, you would already know that.)
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