Money Merge Account
This is a guest post by Kent E. Irwin. Kent is the founder of eFinPLAN, an online comprehensive financial planning for software for consumers. He is also a Chartered Financial Consultant (ChFC), a Chartered Advisor in Philanthropy (CAP) and a Chartered Life Underwriter (CLU).
Money Merge Accounts Promote a System to Pay Mortgage off Early
What Are They and Do They Work?
Several firms promote home mortgage payment systems commonly known as Money Merge Accounts which assist in early mortgage payoff. I have been approached socially, professionally and at church by individuals marketing these programs, therefore I wanted to learn more about them. This article reports what I found out about them. I feel it is important to note that I have never marketed such programs and have tried to keep this article as informative and free of bias as possible.
The Money Merge Account Overview:
Money merge accounts originated in Australia and over the last few years have gained in popularity in the US. Several companies under different names market them, and each one may be a little different. For simplicity I will refer to them all as MMA and not discuss the differences of each program. They are early home mortgage payment systems offered as an alternative to traditional ways of making extra mortgage payments or bi-monthly payment plans.
Characteristics of money merge accounts – MMA:
- Money merge accounts are a system and software to pay off mortgages early using the combination of four elements:
- Regular fixed first mortgage
- Home-equity loan/line of credit
- Monthly earned income
- Monthly bills
- The service consists of software which estimates the cost savings, and manages the cash flow and transfer of money between the four elements listed above. They provide telephonic and web based support.
- Software and service as explained to me, provides mathematical cost savings by: making advance mortgage payments, using different loan accounts to move money back and forth to minimize interest costs, and precise timing of both.
- The services usually are front-loaded, meaning you pay 100% up-front for unlimited software use and service that doesn’t terminate in time, compared to paying a small up-front charge and annual maintenance charges.
- The cost is between $2,000 and $4,500.
- The services are marketed by financial professionals, including mortgage brokers, realtors, insurance and financial advisors, and through multi-level marketing programs. Depending upon the agent’s level, commissions can range from several hundred to several thousands of dollars per sale.
- MMA plans are marketed through one-on-one meetings, very convincing seminars, and there seems to be networking in some churches.
Money Merge Account Claims:
Some of the claims of MMAs are: Early mortgage pay-off, superior to other early mortgage pay-off plans, and complex software necessary to manage all of the moving parts. Advocates justify the cost due to complexity and ongoing needed service.
It appears that this plan does indeed work. I hope that these programs help many people to save thousands, however pay close attention to pay-off estimates and assumptions to be sure that cost savings claims are not over-estimated. Does the complexity and service justify the cost? The pay-off may indeed exceed the investment, but are there companies entering the MMA market with lower costs? If popularity of these plans grows, this may happen.
Ask for full information; obtain independent advice from financial and accounting advisors as to the viability of such programs. As with all long term financial commitments, it is wise to read everything in minute detail, including refund policy if not satisfied, and ask for an explanation of anything you don’t understand. Ask for advice from legal advisors before signing a contract. You may want to obtain advice from tax advisors as to your individual tax implications, and lastly contact your state’s attorney general for information about the company you may be considering.
The conclusion on Money Merge Accounts
Given the current mortgage crisis and depreciating real estate values it may be wise to approach such programs cautiously. They are probably not appropriate for everyone, including those with cash flow (living paycheck-to-paycheck) or credit problems. When it comes to making decisions always remember three things: 1. Seek advice from many people (Proverbs 15:22 “Plans fail for lack of counsel, but with many advisers they succeed)”. 2. Nothing ever purchased lives up to all of the initial hype, and 3. Pay attention to your gut instinct. Lastly, I am always concerned when multi-level marketing programs network through churches. If the programs don’t work out for some people, it could negatively affect the church.
Please comment if: you are aware of companies entering the MMA market with lower costs, or if you know of any independent consumer magazines or accounting firms who have fully audited the computations and published the full results. It would also be good to hear from users of such programs as to the level of service and results they have received.
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Comments on Money Merge Account »
I have been a mortgage broker specializing in mortgage acceleration. I have reviewed all of the current programs on the market. While some claims are better than others, prices are cheaper than others the key in my opinion is support for an average client to be able to be successful. Lesser cost or better claims do no good if a client is confused or cannot work the program. While researching each program ask for a client support number and call each company in consideration. This will give you an initial idea on how much support you will receive while on the program.
Cheers
I once had a very wise friend give me this piece of financial advice. Never buy a financial product from a friend, relative or somebody you go to church with.
You can ask these people for references of who they use or recommends. But never buy from within your immediate circle. If the product goes south, you damage a relationship. If things don’t work out, its much easier to fire the person and move on.
Multi-level stuff in churches just scares the heck out of me. I’ve seen more harm done than good.
I have several true professional financial guys in my home church (not this part-time wannabe hack stuff you see in multi-level deals). I chat with all of them on a generic level - what they like, don’t like, advise, don’t advise, etc. I don’t buy anything from any of them. However, I send them a lot of business from outside our church.
you know, I think that is good advice. I have heard it too and I have seen relationships ruined by it as well…
[...] Money Merge Account Kent is the founder of eFinPLAN, an online comprehensive financial planning for software for consumers. He is also a Chartered Financial Consultant (ChFC), a Chartered Advisor in Philanthropy (CAP) and a Chartered Life Underwriter (CLU) … [...]
Here in Australia I suspect they operate differently. We had something similar, and for a fee of $375 a year our bank did all the work. We paid absolutely no other fees though. I get the feeling they’re not run through banks? And you do a lot of the money management yourself?
We had an account and a credit card. All our income went into our account, and we lived off the credit card and paid it in full each month from the account. That was our loan account.
In my opinion they’re only worthwhile if you’re very disciplined with your money, otherwise it’s too easy to get into trouble.
its definitely worth it if u can afford it, but its not for everyone :/
~Mike
[...] Money Merge Account This is a guest post by Kent E. Irwin. Kent is the founder of eFinPLAN, an online comprehensive financial planning for software for consumers. He is also a Chartered Financial Consultant (ChFC), a Chartered Advisor in Philanthropy (CAP) and a Chartered Life Underwriter (CLU). Money Merge Accounts Promote a System to Pay Mortgage off Early What Are They and Do They Work? Several firms promote home mortgage payment systems commonly known as Money Merge Accounts which assist in early mortgage p [...]
[...] from Christian Finances presents Money Merge Account, and says, “Looking at the pros and cons of money merge accounts - who should get one and who [...]
The early payoff from this kind of account comes entirely from massive amounts of extra principle, not from the daily compounding or floating your paycheck. If you put the same amount of additional principle into a regular fixed-rate loan, you will come out ahead of the money merge account.
@Anon
from the simple comparisons and calculations I did I don’t agree. Although I would not recommend the money merge account for many people, from the numbers I crunched it came out way ahead of just adding the extra principle to your “regular” mortgage payment. The difference seems to come from the way that interest is calculated on the different loans.
Of all of my 40 years in business, never has there been a consumer financial product that has more benefits to home owners and our economic system as a means of paying off debt than the Money Merge Account System from United First Financial. Take the time to learn why simple interest money leveraged to pay off amortized interest is the best stewardship of a persons personal finances to come along in a years.
The only reason I can see as to why there are such strong opinions against this product is because it is a very real threat to the conventional wisdom of millions of financial professionals.
As to the cost of the Money Merge Account Software, should I list the fees for services of all the financial professionals we have relied on over the years. Did you get your moneys worth when you paid thousands to your mortgage broker to refinance your mortgage? Did you get your moneys worth when you paid your real estate agent 6% to sell your home? Did you get your moneys worth when your financial advisor put you into mutual funds that have been mostly flat for the last 25 years? No, most of us just pay these fees because they are commonly accepted practices. Fees for the MMA will be accepted in the near future also with the major differce being that the investment will actually give you a substantial ROI.