I’ve heard a lot lately about a magical mortgage reduction scheme from Dave Burke and his Real Talk Network hype. The Mortgage Accelerator Plus software Dave Burke hawks was originally created by Norm Bour. But the basis of Burke’s HELOC mortgage reduction scheme seems to come straight from the work of Harj Gill that has been teaching this method since at least 1997.
Mortgage Accelerator Plus is nothing more than what most debt reduction calculators, many are available on the web for free, can offer. MAP was created by Norm Bour and for some reason his Mortgage Accelerator Plus site is no longer operational. But his approach was this “Australian mortgage acceleration” HELOC scheme that it looks like Burke took over and uses as part of his magic debt reduction hype. Authorities in Australia cracked down on people promoting this pitch. Source
The Australian Securities and Investment Commission (ASIC) has acted to close down loan calculators on more than 100 websites of Australian financial institutions, including banks, credit unions, other lenders and finance brokers.
The calculators suggested that using a line of credit will result in the consumer paying off their home loan more quickly.
‘Most lines of credit charge higher interest rates than standard home loans, so when you stop to think about it, it was extraordinary to suggest that paying higher interest could pay off a loan sooner’, said Mr Greg Tanzer, ASIC’s Executive Director of Consumer Protection and International Relations.
The loan calculators produced a graph, comparing the time taken to pay off a standard loan with the time taken using a line of credit.
However, the way the calculator was designed meant that:
- extra repayments were credited to the line of credit but not to the standard loan;
- the line of credit was at the same interest rate as the home loan; and
- these assumptions were not made clear to the consumer, so that the calculator showed that the line of credit was paid off more quickly than the home loan but it was not clearly stated that this was due to higher repayments by the borrower.
‘The only way to pay off your loan sooner is by moving to a loan with a cheaper interest rate or by making extra repayments. In fact, if you can afford to make extra repayments you will probably save just as much by making those payments on your existing loan, and you can avoid extra costs, such as early repayment penalties and application fees, by not refinancing,’ Mr Tanzer said. – Source
Manage your mortgage by getting a new home equity line of credit (HELOC) which only charges interest on the outstanding monthly balance. Since this is true, one could borrow money on the HELOC to pay down the first mortgage and then manage the HELOC balance through a complex bill paying structure. This leveraging of the way HELOCs versus first mortgages calculate interest could be used to minimize total interest owed with careful management.
As with most scams, a little bit of truth is necessary to sell the mark. But the MMA folks just used up all their truth right there. Yes, a HELOC charges interest a different way. However, can one really conclude an actionable difference exists that is so powerful the average home owner can pay off their mortgage in seven years?
Absolutely not…it’s ridiculous to even suggest it.
Banks are in the business of extracting more money from you, not less. If the banks had a loan product on the shelf (home equity loans) that killed the income from one of their most successful products (first mortgages), they’d pull it off the shelf.
Money Merge Account Software [Like MAPS]
MMA’s require a new HELOC and $4,000 software to “manage” everything. This is just when banks are cancelling Home Equity Lines in record numbers due to dropping home values. An obvious limitation tosses this program out before it ever gets out of the gate.
But even if you can get the HELOC, I would NOT suggest a money merge account to pay your mortgage off early. Who wants to go into more debt to buy their overpriced software (anywhere from $1600 up to $6,000) and be restricted by the system to funneling all bill paying and all income through the new HELOC? There are a ton more requirements for the system to work as advertised most of which the average home owner could never complete.
This money merge account system is ugly and is really just a way for loan starved originators to move into selling overpriced software and HELOC’s since bona fide home buying and refinancing has dried up completely. – Source