Don't Get Tricked by Equity Accelerators
Interest Cancellation, Merge Accounts
or other Financial VOODOO!
The Reason You could Save Money is that:
"Every month YOU would effectively be spending 100% of your Discretionary Income just to pay down your mortgage balance"... YOU Can already do that Yourself for FREE !
It's NOT because of some fancy expensive scheme! ...
It is NOT MAGIC or Rocket Science! ...
...it's simply YOU spending YOUR Income!
It has come to our attention that so called "Mortgage Equity Accelerators", "Merge Accounts", "Mortgage Accelerators", "Equity Accelerators", "Ownership Accelerators", "Offset Loans", "Cycling Loans", "Money Merge Accounts", "Interest Cancellation Loans", "Mortgage Minimization", "1st Lien Helocs", "Speed Equity", "Equity Genies", "Ultimate loans", "Equity-o-Matic", "Smart Equity", "Current Account mortgage", "Mortgage Magic", etc... are again being marketed to consumers in the State of Florida, and elsewhere in the United States. After examining these various systems over the years, we understand what they really are, how they really operate financially and mathematically, and what they really do....
As Finance Professionals with years of education and experience, we feel it is our ethical responsibility not only to inform our customers, but also to inform the general public about what we believe is misleading financial voodoo! To help the average homeowner see what is really going on, we are offering FREE information and FREE Online resources: mortgage calculators, a Free excel spreadsheet, and a Free paper and pen worksheet. These FREE resources will allow you to see for yourself (without deception) what these systems are really doing, and how you can accomplish the same things yourself both cheaper and faster.
We believe that
many some of the salesmen for these equity accelerators mean well, but unfortunately they usually do not fully understand what they are endorsing and selling. Because of their financial ignorance, lack of financial education, lack of experience, and lack in understanding of financial analysis they very often (even un-intentionally) are mis-leading homeowners into wasting money inorder to do something you can already easily do for FREE.
Understand, YOU can pre-pay your mortgage and do the same calculations yourself for FREE, without ever paying a penny for software.... let alone the $1,000, $3,500, or even $10,000 that salesman are charging! Financial management is a very good thing, but you don't need to waste thousands of Dollars on software that accomplishes virtually the same thing as a .99 cent calculator and some common sense!
Don't be Misled & Don't Waste your Money!
You May Use Our FREE Resources at Any Time,
at ZERO Cost to You!... Don't Waste Your Money!
If you Feel the need to purchase personal budgeting software for help, motivation, tracking, or extra discipline then we recommend either:
Quicken 07' or Microsoft Money.
Both programs allow you to track loans and mortgages, track pre-payments, do personal budgeting, spending analysis, retirement forecasting, download and pay bills electronically, and even automate much of your personal finances all for less than $80.00. They are both backed by large worldwide companies (Intuit & Microsoft) who will be around forever.
We're not trying to sell you anything... we just want to educate the public and help folks make sound informed financial decisions!
(Click here for BestBuy.com we receive ZERO compensation)
Paying off debt faster than required is not a bad thing to do; It's Very Good! ... BUT... home owners need to understand the facts and the truth about what is really going on with their finances, as well as the ramifications of the financial decisions they are making.
While it is true that paying off any loan early (mortgage, auto, credit card, etc...) will save you interest cost over time... the Problem is you CANNOT reduce or payoff a debt Today with money you do not have Today. If you spend/repay/transfer more money than you earn or more than you have, you are in FACT borrowing MORE money and Increasing your debt! Negative Amortization loans are only one example of this... You are then paying more interest on your increased debt. Sometimes it's necessary, sometimes we choose to do it, but we should always be informed and understand with our eyes wide open beforehand!
Many of the equity acceleration or interest cancellation systems promise to save you money and show you paying off one loan with the proceeds of another, and/or a variable rate 'interest cancellation' account. This is basically just "Financial Voodoo". If you pay close attention you will see... on one hand they direct your attention to what you might not pay in interest on one loan over 30 years. BUT on the other hand they gloss over or leave out how much EXTRA Interest you could and likely will be paying on the HELOC, ALOC, or other supposed variable rate interest cancellation accounts!!!
Look over here!... But sussh... don't look over there...
That's the kind of thing we call "financial slight of hand".
Others have called it smoke and mirrors, dishonest, a sin of omission, deceptive & misleading, or even far worse!
...the devil of it is in the details.
Further, the $3,500 upfront cost/cash you would pay for 'software' is money you must either borrow and repay, or spend from your current savings. That's $3,500 you will never get back, and that you could instead use today to simply pay down your mortgage balance and help yourself... instead of borrowing and giving it to someone else. That's $3,500 of extra debt and/or lost savings!
For Example: A one time $3,500 pre-payment on a $200,000 mortgage at 6% interest will save the homeowner up to $16,657 in interest over 28.7 years! Plus the initial $3,500 savings = $20,157 in combined savings! That's an average interest savings of $581 per year, or $48.42 per month by just making a simple one time $3,500 principal pre-payment, instead of throwing away money by purchasing some voodoo equity accelerator. That what's called an opportunity cost, and it's only one part of the measure of the real cost of a $3,500 upfront expense over that time. The actual cost to you will depend on a number of factors.
They also often do NOT honestly or truthfully explain why you would really be saving interest and paying your mortgage off faster. It's not some kind of secret rocket science... It's simply because, every month you are effectively spending 100% of your discretionary income to pay down your mortgage balance. That's called "pre-payment" or more properly "curtailment" of debt, and common sense folks have been doing it themselves for ages. Anyone can do this themselves for FREE... you don't need software, just some common sense and a bit of discipline!
To be CLEAR !
We do not recommend anyone spend
100% of their discretionary income every month...
** We have tried to point out that is unwise, unsound, and represents an extraordinary risk. It is a recipe for future problems or even financial disaster.
If someone says “I can’t afford a 15 year mortgage payment; it’s too big for me”… then WHY on earth would they choose to make the equivalent or even greater monthly payment via any equity accelerator?... when they can’t afford it in the first place? Pre-paying by choice (after the fact) is the same thing as choosing to re-pay the loan back faster from the very beginning. If you can afford it monthly then that's great, but if you cannot afford the payments then you will end up in a bad financial situation, with a big mortgage payment and no cash left in the bank!
Choosing to be 'Cash Poor', and NOT having 'Actual Cash Reserves' can lead to various financial problems and hardships. Many people have found from the unexpected loss of a job, illness, unexpected home repairs, and common everyday family issues that being "strapped for cash" or not having "cash flow" can and often does lead to ruined credit, and can force you into More HIGHER INTEREST RATE debt! * Unfortunately, Borrowing more money and living on debt is usually not a solution to personal financial problems.
Understand that A HELOC is NOT CASH! It is not a depository or demand account and if ABSOLUTELY does not replace the need for real savings in a checking, savings, cd, or other insured demand deposit account! Don't be mislead to think that pre-payments to your loan liabilities are cash deposits... real estate equity is not cash, it is not a liquid asset, it is not insured, it can LOOSE value... and you can loose access to it! Make sure your savings are insured @ FDIC.gov
Can you generate (maximize) additional income from your cash accounts?… YES, you can at very least take cash from 'under your mattress' and put the cash on deposit where you are being paid interest income. There are many ‘risk free’ FDIC SIPC NCUA DIF etc... government insured options paying more than 5% apy right NOW! Google online savings account search and speak with your local bank about the options they offer.
We have all heard the expression "borrowing from Peter to pay Paul"... this will not save you money unless you lower your overall interest rate costs! That's why many people often choose to refinance their debts and mortgages. BUT, it is most always bad financial advice to borrower at a higher interest rate to pay off lower interest rate debt(s)... that will NOT save you money!
To have the lowest overall interest cost (to pay the least total interest), you should look to Pay Down Debts with the Highest Interest Rate / highest APR FIRST. Focus on reducing your Overall Interest Rate Expense from ALL sources and then on savings/investment and prudent repayment of debts. Sometimes debt consolidation can help and save you money, however there is real risk in taking currently unsecured debt and securing it by pledging your home as collateral... you don't need credit cards, but everyone needs a safe and secure place to live.
Realize also that it's the 'effective after tax interest rate' on your mortgage that's important in assessing your personal debts. The Idea of a Mortgage Interest Tax Deduction is uniquely American! A first lien mortgage @ 6% truly costs most tax paying home owners much less than that! Don't be mislead by comparisons to Australia or Great Britain... those countries don't have a mortgage interest tax deduction, and they also basically have ONLY shorter term adjustable rate mortgages.
Australia has even acted to STOP the misleading and deceptive sale of HELOC mortgages that claim they will pay your loan off faster! It's now ILLEGAL in AUSTRALIA to make those FALSE claims! Click Here to read about what is being done right now in Australia to STOP the deceptive and misleading sale OF 'equity accelerators'.
"Australian Securities and Investments Commission (ASIC) - concluded years ago that there were no savings to be made, and that promoters were engaged in unlawful conduct. Examples and charts showing massive savings have all been shown to include significant increases in payments being made to the mortgage.”
"Court orders (by consent) against a company promoting “mortgage reduction”, including orders that the company write to past customers advising they may have a right to claim loss or damage caused by misleading and deceptive conduct.
The misleading and deceptive conduct included showing clients comparisons between loans arranged by the company and standard loans, that represented that by switching loans they would save money and pay off their home loan sooner but failed to adequately explain that to obtain this benefit clients would need to make extra repayments.
Despite the action from the regulators above, there is still some promotion of this type of scheme, but much less than in the US."
For further information, see the following links:
this is an excellent article from Australia...
"Smoke and Mirrors" - You Must READ THIS LINK
"Mortgage Accelerator Under Fire" - this is also a great article
AISC: "Mortgage Reduction = Misleading Marketing"
In the USA, due to our robust financial markets, good government policy (FannieMae, FreddieMac, GinnieMae, FHA & VA) and to our history of local community based banking traditions, we are Very Lucky to have access to stable Long Term Fixed Interest Rate Mortgages... with 30, 40, and even 50 year FIXED interest rates. That's one of the many reasons home ownership is so attainable in the USA. People in most other countries of the world are lucky to find a 3 or 5 year fixed rate mortgage or real estate loan... and a far lower percentage of them can actually afford to purchase a home.
Don't be fooled, though it's a fairly safe long term investment over 30 to 40 years, the average home owner in the USA actually moves every 7-10 years. The Equity in your home is NOT a Risk Free Short Term investment over short periods of time... it does not pay you interest or dividends, and it Can Decrease in value. Unfortunately, right now many real estate investors in Florida, California, Arizona, Nevada, and unfortunately now all across the country, are finding that out the hard way! (click here for some current info)
Don't be Tricked into wasting your hard earned money!
Find Out ALL the Facts, Talk to an Accountant or CPA!
Get an Honest Opinion, Educate Yourself, & Don't Get Tricked!!
But don't just take our word for it!
Click here for referencess and links to other Published articles about Mortgage Equity Acceleration Voodoo
click here for a bit more about the Voodoo)
We have been asked: Q: "Why did you spend the time to post this information?"
“If you use your skill and imagination to see how much you can give for a dollar, instead of how little you can give, then you are bound to succeed” (Henry Ford)...
We do sincerely believe in treating everyone with the same respect, professionalism, and courtesy that we wish to receive ourselves, and that we would show to a member of our own family. We have a great deal of real estate, mortgage, banking, tax, accounting, and finance experience... Knowledge is something that should be shared to help and to serve everyone and to help the community... not just to help ourselves.
Service for the greater good is what defined out Greatest Generation!
We truly hope our efforts have helped you and your family.
Got a Question For Integra? (click here)
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Here is what Clients have told us, and people have had to say:
"I just wanted to thank you profusely for posting this information on the internet!!! I was about to make a very serious mistake! THANK YOU THANK YOU THANK YOU!!!!!
YOU PEOPLE TOTALLY ROCK!!"
"I searched the web for information about this 'MMA magic', and could find nothing that wasn't published by someone affiliated with the software. I am very skeptical about any product that only offers glowing praise by the people who benefit most from that praise. THANK YOU for offering your take on MMA."
"It's just like one of those 10 minute [abdominal] fitness machines. They claim you can lose 90 pounds and look 29 again... SO long as you also eat right, run, exercise for 2 hours every day, and have plastic surgery. If you did all that yourself, you would get the same results without the silly plastic abb machine. The only thing that their product really make lighter.... is your wallet!"
"Thank you so much for all the digging around you've done on this thing. I REALLY appreciate it. Your personal and professional opinion means a great deal to me. Thanks for helping to keep my wheels between the white lines!"
"Thank you, I heard a rumor going around in the office about a company that sells a program to help payoff your mortgage faster. But with the company you have to pay a fee to get their product... I was curious to see if this was true. I searched the web and happen to see your web site that offers [ a very similar] program, and it Free."
"Thank you for posting that information on the MMA. You just saved me and my friend over $7,000 plus the [compounded time value we would have lost at ~6%]. I'm glad I understood... Thanks a bunch!
"As a Real Estate Broker for 25 years, with a University Degrees in both Business and in Accounting, I couldn’t see the advantage of paying someone to tell me to make additional payments on my home loan. I don’t need to pay someone $$$ to tell me to pay my loan off in additional bite sized chunks. Thanks a million!"
"We greatly appreciate the information. Professionals such as you are rare these days. Kudos to you and your practice!"
"Someone tried to get our daughter to purchase the MMA software. They did not show any figures regarding the HELOC, however... I showed her what she would actually be paying every month (using the analysis figures) and she said, "I can't afford that!"... Well Duh! Thank you."
"I am definitely happy I found your site...All I really needed was paper and pencil…about 10 cents. Your doing a great service by educating the public that money management is not some sort of rocket science. Just plain ol’ common sense."
"Thank you.... My relative is selling the MMA product and I wanted to prove that this can be done on your own, without taking the time to build a spreadsheet myself. Thank you for this info."
Jane (Sr. Accountant)
"Thanks for the spreadsheets. Your work here Excel is INCREDIBLE! Thank you SO much for sharing this! You are a SAINT! Who says you can’t get something for nothing? Bless you for sharing your knowledge with the world!"
"I also have Quicken … I can reach my objectives and [not waste] $3500."
"I admire you for your good heart and generosity. I paid over 4K to learn the system, yet no access to software to track my progress. With your spreadsheet, I can now track my own without calling somebody. Thanks a lot. Remember, the good deed you shown will come back to you. God bless"
"For 20 years I have been a financial planner here in Australia... Any spare non-essential money, send it in to pay off your principal! It is that simple.
I applaud you on your efforts to assist others to manage their own (financial) affairs."