Should you spend $ 3,500 to save on your mortgage?
The company just wants to help Americans pay for their houses faster and make a lot of money while helping. So why do many people call it a scam? There are websites about it, blogs about it, and even some forums that discuss the United First Financial scam, or not.
United First Financial is the company behind Money Merge Account (MMA). United First Financial, also called UFF or U-First, is not a bank or a mortgage lender or broker. It is the company that was created specifically to endorse and sell a single product, Money Merge Account.
The founders, Skyler Witman and John Washenko, have experience in the mortgage business. The UFF website says millions of dollars have been spent since 2002 hiring a mathematical aeronautical engineer from GE and developing the comprehensive software for the MMA. That’s where the “scam” charge first appeared. Most homeowners probably wouldn’t think of hiring an aeronautical engineer to develop algorithms to help them with their mortgage prepayment.
The software is quite elegant. You don’t install it on your home computer; you don’t own it. The software resides on UFF’s own computers. Mainly, it adds up the income and expenses that clients provide to the program and predicts when they should move their assets, specifically home equity and paychecks, toward their expenses, that is, their bills. In addition, the software predicts exactly when the client’s house will be paid in full and calculates the final savings using the accelerated schedule in which it allocates it. All of that can be done in a fairly simple free spreadsheet, like OpenOffice. That is probably the second reason why many people think it is a scam.
At $ 3,500, the Money Merge Account seems like an exorbitant price, and it might be. But considering that clients may need customer service for 10 years (the approximate time it can take to pay off a mortgage), it may not be long. However, this could be the main reason why it is considered a scam. That’s a lot of money, even to figure out how to pay off your home years in advance, often paying off the mortgage entirely in about a third of the time. However, UFF has a solution for that too. Finance it with the capital accumulated in your house that is wasted.
Not only are sales reps instilled with missionary zeal, but they are also well paid for their services, earning up to $ 1,000 per sale of the $ 3,500 program. To nurture their fervor and keep overhead low, the Half a dozen UFF managers have chosen a multi-level marketing (MLM) strategy. Reps pay a small fee to get started and earn only commissions and bonuses, not salaries. This, believe it or not, is one of the main reasons why MMA is called a scam. People are highly suspicious of MLMs, even though they are as legitimate as a corporate hierarchical structure with paid sales reps. Over the years, all kinds of businesses throw up some bad apples.
The basic concept of MMA is to take equity out of your home to pay off your mortgage, which dramatically reduces the remaining principal on your home loan. The lower the principal, the less interest you will pay. Home equity lines of credit (HELOC) typically carry interest rates a couple of percentage points higher than primary mortgages. Since the HELOC is a smaller lump sum, and since monthly income reduces it even more (until time to pay the bills), even the highest interest rates are nominal, for example, around $ 30 a month for an average daily balance of $ 5,000. Since your home mortgage balance is so much higher, even a low interest rate, like 6%, can make your monthly fees very high – around $ 500 a month, interest only, about a balance of $ 100,000! And this, dear friends, IS the main reason why Money Merge Account is considered a scam! People’s understanding of compound interest is so vague that they can’t understand how using 8% money to pay 6% money could work.
Although I personally think you don’t need to spend $ 3,500 to use this technique (a position supported by the United First Financial website), it works. It is not a scam. They recommend that you do your due diligence, because it is not for everyone.