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FIB - Scams 101
Re: NOT a scam... simply software that calculates math
Posted By: JimmyDaGeek In Response To: NOT a scam... simply software that calculates math (Sue Copening)
Date: Tuesday, October 30, 2007, at 1:36 p.m.(pst)
You have not addressed any of my comments - you simply rephrased them.
"We simply free up more that they did not know that they had... and the software optimizes their cash flow"
I am glad you wrote that because that is the essence of all mortgage acceleration products. It is impossible for someone without "discretionary income" or "stagnant money" to pay down their mortgage. As everyone has pointed out, you need some kind of extra cash. Your MMA program relies on two ways to work this kind of magic out.
A) Your MMA program prefers to calculate income on a 4-week basis if someone is paid weekly or bi-weekly. It is very simple, then, to come up with savings since there will be an extra paycheck every 3 months.
B) If someone says they have no discretionary income, that is probably true if they simply added up everything they spend in a year and divide it by 12. But, some bills are paid on a quarterly and yearly basis, which leaves some padding that can be harvested in the short term.
c) As you have written, the MMA program uses the padding that people have in their check book. This is something anyone can do.If you truly did not have "discretionary income", then any money borrowed through the HELOC to pay off the mortgage would accumulate interest that could not be paid, since there was no extra money. This interest would have to accumulate in the HELOC until the mortgage is paid off.
No matter what your estimator says, each dollar I spend to pay interest in the HELOC is a dollar I can't use to pay off the mortgage. While the MMA may pay off the mortgage in less time, it will cost more in interest than if you did it on your own.
I used the bi-weekly concept to show that if you start with a mortgage of $200k @ 6.5% for 30 years, your monthly payment is $1,264.14. If you pay $500 per month, which is much more than bi-weekly, you reduce the mortgage term to 183 months or 15 years, 3 months, right in-line with your statements.
I only spoke about a spreadsheet if I wanted to get every last dollar of performance. The average Joe or Jane can simply maintain their check book and send in the spare cash they find after they pay all their bills in a month.
As for my open mind, I have posted everywhere I can that I want to see a worked-out example showing how MMA software manages the cash flow to minimize the interest paid to the HELOC. I don't want proprietary algorithms, just a monthly cash flow snapshot. For those people that are too busy to care, math-phobic, or financially illiterate, I have no doubt that mortgage acceleration software works. The only question is whether it is worth $3500 to be told to do something you can do on your own.
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