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New Mortgage Repayment Method a Risky Business

Dear Mary: I recently took a Web seminar on Money Merge Accounts in which they talked about the idea of paying down a home mortgage using a home equity line of credit. They told us to use the home equity line of credit as a personal checkbook to pay all our expenses. But how would using a home equity line of credit that has a higher rate of interest be to someone's benefit? -- Mike, e-mail

Dear Mike: Money Merge Account is a trade name for a somewhat complicated mortgage repayment technique. Generally, the technique requires you to have a home mortgage, impeccable credit, a lot of equity and a big low-interest home equity line of credit.

At the beginning of every month, you determine your total take-home pay for the coming month. Then you transfer (borrow) this amount from your line of credit at the beginning of the month -- before you actually receive the income you have projected -- and send that to your mortgage holder as an extra principal payment.

Next, you arrange to have all of your paychecks deposited directly into the line of credit. You write checks against the line of credit using it as your household checking account.

Simply put, you never allow yourself to have money sitting in a bank account. You pay everything with debt. Every dollar you earn immediately goes to cover some debt.

It's the mother of all juggling acts.

A company, United First Financial, has taken this general theory and named its home equity line of credit the Money Merge Account. If I understand their program correctly, for a fee of $3,500 -- and if you can qualify -- you get their equity line of credit and software for your computer that supposedly lets you track, project and manage this tricky repayment technique. United First Financial peddles the MMA and software in free, high-energy seminars.

There's some logic to the theory, but in reality, I find this terribly risky, if not dangerous. The adjustable interest on the underlying line of credit could turn this thing upside down in a hurry, should interest rates rise. I wouldn't touch this mortgage repayment method with a 10-foot pole. But don't take my word for it. I challenge you to run this by a licensed CPA to see whether he would buy this deal -- or even take it for free.

If you have $3,500 to spare, I recommend you use it to pay down your mortgage principal. You'll whack years from the payback period and a load of interest, too -- on your own. No juggling and no software required.

Do you have a question for Mary? E-mail her at mary@everydaycheapskate.com or write to Everyday Cheapskate, P.O. Box 2135, Paramount, CA 90723. Mary Hunt is the founder of www.DebtProofLiving.com and author of 17 books, including "Debt-Proof Living." To find out more about Mary and read her past columns, please visit the Creators Syndicate Web page at www.creators.com.
COPYRIGHT 2008 CREATORS SYNDICATE INC.



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I like Mary she give excellent advice... most of the time. But here she has it all wrong because she didn't really research this program or company... just made a snap pre-judgement. First... United First Financial's "Money Merge Account" program is NOT a line a credit... it is simply a software program. You don't need a line of credit to do the program at all anymore. The new 4.0 version attacks debt where it sits. The average client is paying off debt in 1/2 to 1/3 the time withOUT changing their budget or lifestyle in any significant way and without refinancing their mortgage... if they have one. The software works with a perfect "marriage" of four features... 1) It does the math - like a "Financial GPS" it gets you to the quickest way to zero debt paying the least in interest. 2) It has features in it that show you the impact of EVERY dollar spent (and before you spend it), and what impact that is having on your financial picture. 3) Because it is so easy to use, and sensitizes you to your situation constantly, it actually becomes a behavior modification tool and you get EXCITED about staying on track with the program. 4) It has unlimited Client Support and coaching. Have a question... hold times are less than 30 seconds most days and they will walk you through anything you need and answer any questions you have. Just need a word of encouragement? Call! Because of all these factors... 95% of UFIRST clients "stick to" the program and log in monthly to use the software. Also... the average client is getting 20% BETTER results then initially predicted (clients get a report showing the date they will be debt free before they get on the program. That is tied to their money back guarantee). The company has won THREE awards now... one from ERNST & YOUNG, the top 10 accounting firm. Also... one of the top accounting firms in the world has approached the company to represent the program outside the US and is currently in negotiations. If someone can get out of debt themselves... that is great. But most American's are like "boiled frogs" when it comes to how much debt they have accumulated over time and the average American has less than $3000 saved for retirement. Obviously whatever we have done in the past is NOT working for MOST of us. UFIRST is a great solution for a lot of people and the clients we have on the program not only LOVE it... they say it changed their lives. Einstein said that "Insanity is doing the same thing over and over again and expecting a different result." Sue@TeamSue.com

Comment: #1
Posted by: MediumSizedSueOrlando
Sat Feb 21, 2009 8:07 AM
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