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 livinginnky
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livinginnky
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michelle
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michelle
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livinginnky
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Kevin W.
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Posted: Wed Jan 02, 2008 12:30 pm Post subject: MMA figures
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For the "average Joe" the MMA can work.
Yahoo business posted yesterday that 52% of all Americans have less than $25k saved for retirement and a larger majority of those Americans don't have $10k in non-retirement liquid money.
You don't need the MMA to paydown your mortgage, you can and should do it yourself and end up ahead, but that would mean you are the other 40% of Americans who can do this.
For those Americans who don't have a chunk of cash to send to the first mortgage for principle paydown, the MMA program/method can work.
Scenario (with numbers!)
Ln balance of $350k, at 6.5% 30 yr fixed rate fully amortized.
For simiplicity, if you were to make a $5000.00 payment as your first payment, you would reduce would be saving $28,458.54 in interest and shaving 15 months.
Now lets use our average Joe, who doesn't have that kind of play money laying around, but can pay $416.66 per month toward the mortgage (x 12 mos = $5k). The numbers are different. You save $27,521.84 in interest and shave off 14 months.
That's $936.70 savings with the lump sum vs installments.
To optimize, Joe would take an advance off his HELOC for the $5k, and than payback the HELOC in installments with principle and interest.
If Joe deposited $5300.00 into his HELOC, and wrote $4833.00 in checks from the HELOC monthly,he would have an interest expense of $150-$200 covering the 12 months depending on how Joe handles his average daily balance. There will be some months where the outgo is lower or higher. It's an average.
Subtract the interest expense, and you still save around $750.00 which is an additional 15% more than if Joe just sent the money over himself monthly instead of using the HELOC lump sum paydown.
I wasn't sure of my math or even the MMA idea itself so I had a business math professor do the numbers. There are websites out there that will do the same.
I've also read posters say they've ran it thru Excel yada yada. If you don't run a separate Excel program to figure the average daily balance your numbers will be off.
The program is pricey at $3500, but it isn't any different than a rate and term refi. It will take several years to pay for the program cost, but so does a refi to warrant paying its costs.
Joe won't payoff his mortgage in 10 yrs as MMA says, you would have to have more disposable income to do that.
Would I pay for this program? No because I don't want to lose my tax deduction.
But todays American Way is I want it now and I want someone else to do it for me. $6 lattes/fraps 5 days a week when your coffee maker at home works perfectly fine, $15.00 car washes, when you or your kid can do it, mowing your own lawn.....etc.
These are the people who need this program. I am amazed today at how many people are so leveraged to the hilt, but won't give up their Starbucks and BMW's. I get these borrowers constantly. You coach them a bit and do their cash out refi debt consol, but they have no financial dashboard and you see them again in a few years to do another debt consol.
By saying "it's simple just do this or just do that" doesn't work for these people. They need guidance, a watchdog or something.
The MMA will force them to question their spending habits, and give them the arbitrage advantage of leveraging ave daily balance HELOC against the compounding 1st mortgage.
Again, it's pricey. I wouldn't buy it because I don't need it but there are people out there who could use it, because they're not going to spend the time on the a.d.b. spreadsheets, they will want someone else, the program, to do it for them. |
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livinginnky
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Beatriss
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livinginnky
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charlesarmbruster
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Posted: Wed Feb 20, 2008 12:10 pm Post subject:
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"www.homeownerhsipaccelerator.net"
Prime clients are 65%LTV refis, good credit, good disposable income. No software purchase required, no prepayment penalty, can buy down the margin to 0.75% over the 1-yr LIBOR (so closing costs can be quite high, not unlike an FHA with its upfront MI payment).
The lender suggests that you will never need another loan, because you can -- if needed -- access your equity routinely. Otherwise, monthly deposits (including rental property income, etc.) can work away at the principal balance. Essentially, the monthly payments reduce with time.
All mortgage products have a target base -- this one has had good success in other countries, and it is starting to make sense now with the lower LIBOR.
[Link deactivated as per forum rules. Thanks.]
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Chuck Armbruster
Phoenix, AZ
payjunction chuck [on facebook] |
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mattw2411
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livinginnky
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Howie
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Howie
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charlesarmbruster
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