Pay off your Mortgage Early (I mean really early)

[dleii]

Hey guys, I know I am known on this board as the Loan Arranger. I may soon be known as the loan ERASER, check out this video...it is a new product I am launching this month. Let me know what you think...

this video is from a Las Vegas NBC network. Check it out (4 Minutes)

http://i185.photobucket.com/albums/x78/dleii/th_MMA.jpg (http://s185.photobucket.com/albums/x78/dleii/?action=view&current=MMA.flv)

[yamamama]

Interesting video..
Having paid off our mortgage last July ( 7 yrs, 2 mos) into a 15 year mortgage.
I sent the maximum amount our budget would allow each month on the Principal only..(along with the regular payment, of course)
Tell me how the plan in the video would be better than what I did.. Just curious..Thanks

[jeepercreeper]

It makes perfect sense and I have a friend that does something similar...

Pretty cool the guy in the video was a Jeeper too!!!

[Gordon]

Well........

Can't tell exactly how the plan would work from the video, and please don't take my comments negatively, but since you asked -

The two things that pop into my mind are -

One already noted above, why not simply pre-pay additional principle against the existing mortgage and pay it off quicker?

And,

Why would I want to qualify for an additional (second mortgage/line of credit) loan that would increase my total debt, or the potential to increase it, and pay to do so?

I don't need to pay a dime up front to garner permission to pre-pay principle, at least in most circumstances. Sometimes pre-payment penalties exist, especially in the subprime/adjustable market.

Most people tend to overspend, do not budget, and buy impulsively things that are wanted but not necessarily needed. It's the American way.

And, so that you see why my comments are slanted as they are, I will state that I personally am extremely conservative financially (perhaps even a cheapskate), owe nobody anything, and basically retired at 55 - perhaps a minority in today's financial world. I will also say that I did not inherit money, or did I have particularly a high salary. I was just very, very frugal over the years, took the time to understand & manage my finances and invest the best way I saw fit, and am happy & content with all that I have been blessed with.

I believe that, if individuals were more engaged in managing their finances, and less impulsive, regardless of their particular financial situation, they could better posture themselves & prepare for the future.

Marketing, as a tool, regardless of the industry or the product being marketed (autos, electronics, vacations, housing whatever - even financial instruments) is done because it works for the seller, not the buyer. It is very basic economics.

Just my humble $00.02

[jeepercreeper]

I started to write another post to explain it, but it got too deep...

It would all depend on how much you owe on your house, how much you make, and how much other debt you have out there...

[mullins87]

Just exactly how does this work????? Do you use the 2nd mortgage to live while the paychecks go to the 1st mortgage? I'm awfully skeptical.

[BillM]

I am skeptical about spending $3500 for SOFTWARE.

[jeepercreeper]

Just exactly how does this work????? Do you use the 2nd mortgage to live while the paychecks go to the 1st mortgage? I'm awfully skeptical.

Kind of how it works...

you are wise to be skeptical. I don't see any reason to pay for the program if you are already good with your money and good at keeping track of where it goes...

[dleii]

okay, obviously I have struck a chord, and while I would love to sit you guys down in my office to explain this...it is probably not possible, unless we did a conf call. So I will do my best to explain on the thread...

The basic idea comes from "open ended mortgae" and closed end mortgage". A HELOC is open ended...a traditional mortgage is CLOSED ended.

So lets say you already have $150000 1st mtg and a $50K HELOC (line of credit secured by your property). Most HELOCS are interest only and that means (80% or greater will never pay them off) unless they have a plan. The first thing you do is set up the software...interest rates, available line of credit, income, expenses, etc.

Then you basically deposit your regular paycheck into the HELOC...see interest on your HELOC is calculated daily, so the time between when you deposit your funds and when you actually write your check and the check clears may be somewhere between 3 days to 30 days in some cases. During this time your balance on your HELOC will be lower...therefore you pay less interest. This is using the basic principles EVERY bank uses. YOu know this is one of the reasons banks have the tallest/nicest buildings in town.

So NO your HELOC balance will actually start to decrease, and soon the program or dashboard wil ltell you to send in $X.XX to your first mortgage as a principle payment. When you do this on a regular basis, you dramatically change your am. shched...thus paying off your mtg early.
NOW, yes, you can not live beyond your means, and this is what I teach all of my clients...even before this program was introduced to me. (but that does not mean my clients follow what I teach them, remember like Gordon said, most people spend impulsively)

Also, notice all of this is done without changing your lifestyle. And yes, this can work if you have the ability to add aditional monies to your principle as well (and it will decrease the time in which it would take you to pay your mortgae off).

GORDON, I love your way of thinking...unfortunately you ARE in the minority. I close deals every month, where I have closed someone 2 years ago at 100% loan to value and they have ran up $20K in Credit card debt and now they want to REFI and cash in their equity so they can decrease their payments (but now that $20K is on.......30 years___OUCH) it is sad but true. I got excited about this not because of the income potential but it can really help a lot of people get "more engaged" (using your words) so that can really live the American dream which is to OWN a home not to be in debt up to their eyeballs on a home. YOu are right, most people will have a 30 year mtg and never pay it off, sell that house and hope their home has appreciated enough to even sell (given todays market) and buy another one and do this until they die....all the time, being in debt. I want to change this cycle, even if it is just my own little sphere of influence.

So, while this may not work for you, it WILL in fact work for a lot of people, what usually happens is they end up spending a lot less because they see the potential of the program...aka "become more engaged in their finances" It's all on the dashboard.

I did not give the program justice hope this clears some of the questions up.

[dleii]

Kind of how it works...

you are wise to be skeptical. I don't see any reason to pay for the program if you are already good with your money and good at keeping track of where it goes...
that is the main problem, in the position I am in, I have noticed that MOST of Americains do not really have any idea where all of their money goes. It has really changed over the last 15 or 20 yeras, but again most people spend now and worry about it LATER. I see it EVERY DAY.:confused:

[admar2]

Just exactly how does this work????? Do you use the 2nd mortgage to live while the paychecks go to the 1st mortgage? I'm awfully skeptical.


thats what it sounds like.


don't know what the $3500 worth of software is doing, besides shuffling money around.


another lending scheme, just what the market needs. encourage more HELOC's for a market in which ALOT of people ALREADY owe more than their property is worth.

[Andy's02]

What's wrong with actually paying 25% of your monthly payment every week. Some places you can actually have it set up to automatically draw the payment weekly or bi-monthy from your checking account. If you do the math this will also save thousands of interest dollars and speed up the time frame in which you mortgage is paid off.

[dleii]

that's right Andy, but this will only take the mtg down to about 21 years on a 30 yr mtg. but there again, you are actually paying more towards princ. In my earlier post, i said that this program requires no additional monies to be paid toward the mortgage...its all in making your money work for you (saving interest during the month on your HELOC while sending 'chunks' of money to the 1st mtg). It's pretty interesting, once you see the software and grasp the concept of you 'beating the system"...ie, you using your money as leverage, instead of your bank using YOUR money as leverage. Once again, this is exactly how banks make their money...

[red rubicon]

So are you "borrowing" money on a second mortage to live on?

[dleii]

no, if you do not have a Line Of Credit, you are opening it up to get the process started. Lets do an example.

YOU start out with a new LOC ($0.00)

The first thing you will do in this example is send say $4K to your 1st mortgage...this has changed the am schedule of your 1st...at the same time you deposit you and your spouses income check ($3000 2 week paycheck) so your balance in the LOC is now $1K...and at 7% is around $7 per month...but if you had the LOC at $4K the payment would be $28...that savings of $21 would be sent to your
1st mortgage at the end of the month...this compounds over time and there you have it. Now you are paying out your normal expenses out of your LOC but they hit at different times of the month...which is why you deposit your income check ASAP...so you can drive the balance down on your LOC.

Heck my head is starting to spin just explaining it...thats why you need the software.

This process (Above) will be the key to getting ahead...remember YOUR money working for YOU not for the bank.

[admar2]

still wondering what $3500 worth of software does for you.


gonna take a while to make that money back in savings with this "technique"

[fjmf]

delii if I was interested in this software where would I get it from?

[bigblacktj]

Thought I was a smart guy until I read that. Seems like it cost a lot to save a little. Maybe it works I will have my girlfriend read and try and explain it. She works at a bank so might make more sense to her.

[Marlon_JBT]

I just have one question:

If he's a valet at a casino, how is he able to afford that house in the first place?

Maybe I'm working at the wrong company... or I'm doing something wrong... or I need to start working at the Casino. :)

[Terry]

[/SIZE]
....send.. $4K to 1st mortgage...deposit...income check... balance in the LOC is now $1K...and at 7% is around $7 per month...but if you had the LOC at $4K the payment would be $28...that savings of $21 would be sent to your 1st mortgage at the end of the month....edit

I don't think this is wise. Think about it;
Without the Heloc, there would be no $28 interest/mo, so there would be no savings of $21. This technique just cost you $7/mo net.
This seems counterproductive.

Reminds me of people intentionally keeping a mortgage they could pay off it they wanted, just so they wouldn't lose the mortgage interest tax deduction. Yeah, pay the bank $10k to keep from sending the government $3k, not real savvy if you ask me.

Or like my wife going shopping, saving 50% off, but still spending $200, and telling me when she gets home, "look at all the money I saved you!"

Sorry, but I think it's best for folks to steer clear of this.

[Farmun]

Four Words come to my mind......




"Dave Ramsey, Debt Snowball"

[mullins87]

Four Words come to my mind......




"Dave Ramsey, Debt Snowball"

That's what I'm doing now, and it does work!

[Paul E]

Donnie, please don't take this the wrong way.

With the home mortgage issues going on right now and all the infomercials about the get-rich-quick schemes and how money can seemingly appear from nowhere, don't be surprised if you get a lot of :BS: flags waved in your face.

The reality is that this will mainly appeal to those who are NOT financially responsible and don't have a clue where their money is going, just as you said. I just have to wonder though, will this really help? If so, who is it helping? At 3,500 for the software, I think it is helping the software vendor more than the family that could put that same 3,500 towards lowering their mortgage principle.

No scheme or software will ever take the place of sound financial management. I'd think 3,500 towards a financial advisor would be a better investment than something like this.

I learned the hard way about financial responsibilities and had to do a debt consolidation when I was in my 20's. Scary. But I recovered from that and have never had a stronger credit rating, which allowed me and my wife a stupid low interest rate for our house.

Honestly, if I were you, I wouldn't push this software too much, but make it available for those who really want it. I'd personally advise some of your clients that if they have financial issues, that they seek a financial advisor first. THAT will build up your reputation and integrity and keep ya from looking like that guy who pimps the OxyClean, knives, and miracle picture hanger hooks.

[mawardjr]

We are working the "Debt Snowball" plan now as well. It is rough at times but the end result will be life changing.

It kinda reminds me of how I had to manage money when I was growing up. I couldn't go to the bank to borrow anything (too young at the time) and parent's did not dole out money to us just because we wanted something. We had to work for the money we got and then saved until we could pay cash for what we wanted to buy.

Somewhere between that time and graduating college ... that part of the brain tends to go dead and people end up living beyond their means.

A good credit score only means that you enjoy living in debt and tend to make your payments on time.

Our ultimate goal is to never need credit again. It will be a long and hard road but the thought of not having to deal with these blood suckers is REALLY nice. Only time will tell if we'll succeed at reaching this goal.

[dleii]

Hey guys, I know I am known on this board as the Loan Arranger. I may soon be known as the loan ERASER, check out this video...it is a new product I am launching this month. Let me know what you think...


this is all good info...To be honest, I got exactly what I was looking for...my main goal in submitting this on an OPEN forum was to get the jist of what the general public thought when they watched this video. Based on the posts here, it seems that reluctancy is a big issue with this product. And, yes the $3500 seemed hight to me as well. But the more I think about people (like have been discussed here) that really can not ever "snowball" or be any where close to managing money, are going to be in debt a LONG time. Now, can this product fit the bill? I think so, but it is definately not for everyone. Like Andy said...I need to basically put the product in my quiver and use it when it can fit the bill.

Also, those of you that said "I hope you dont take this the wrong way...". I definately did not, I used this open forum to kind of test the waters I guess. Plus I did not take offense to any comment, because I know you guys "LOVE ME" and are just looking out for the LONE ARRANGER!!!

PEACE!

[dleii]

Only time will tell if we'll succeed at reaching this goal.
You will Mike...you know why? You are beginning or have already begun a HABIT...and Habits have three overlapping components: knowledge, desire and skill. Sounds like you are well on your way to being DEBT FREE.

(See Stephen Covey's internationally best seller: "The seven Habits of highly effective People")

[John]

LOAN RANGER!!!

Fixed it for ya

I think it an intereting concept, I wished I had built the software and was the one collecting the $3500. Now that's how you pay off your house quickly.

[Paul E]

Mike, I agree with ya on the debt thing. We have a great score now, but the only 2 cards we use now are Amex, which we pay each month, or our Debit card for our checking account. Only debt is home and the boat (which we're selling).

[Marlon_JBT]

I hear ya, Paul. My debit card is my best friend, hands down. Both of my Chase Visas are gonna see the shredder by the end of March.

[yamamama]

Four Words come to my mind......




"Dave Ramsey, Debt Snowball"
I am in the dark with this..
Please explain this "Debt Snoball"
thanks

[John]

I hear ya, Paul. My debit card is my best friend, hands down. Both of my Chase Visas are gonna see the shredder by the end of March.

I don't think credit cards are a bad thing. It's the person using it that can create the problem. Ask my wife how she likes credit cards.:rolleyes:

[Marlon_JBT]

I am in the dark with this..
Please explain this "Debt Snoball"
thanks
I don't know either, but I think this has something to do with it.

http://www.daveramsey.com/the_truth_about/get_out_of_debt_4055.html.cfm

[Marlon_JBT]

I don't think credit cards are a bad thing. It's the person using it that can create the problem. Ask my wife how she likes credit cards.:rolleyes:
Oh yes they are. A very EVIL concept that'll piss you off more than any mortgage or car loan ever will.

Or at least maybe it's just me.

[Bear7]

... But the more I think about people (like have been discussed here) that really can not ever "snowball" or be any where close to managing money, are going to be in debt a LONG time. Now, can this product fit the bill? ...

If a person does not have the discipline or drive to "snowball" as you refer, then how are they going to be diciplined or motivated to let a piece of software tell them when to pay their bills. I'm sure there are exceptions and someone is probably using this and it is working great. I just don't see that anything will change long term until a person changes the behavior that gets them into the financial situation that they might be in. It has to start with a desire to change behavior. Then you look for the tool to help achieve the goal. This just seems like an expensive tool.

I don't mean to be negative. I've just been around long enough and have purchased enough gimics that were supposed to save me thousands. The problem is that those gimics that I got excited about eventually turned into net losses because I never really changed the way I did things.

Anyway, this is interesting and good luck with your product. :)

[yamamama]

I don't know either, but I think this has something to do with it.

http://www.daveramsey.com/the_truth_about/get_out_of_debt_4055.html.cfm
Thanks Marlon....
I DO use one credit card for gas purchases and the things that I purchase online BUT, I pay it off in full EVERY month....
I do accumulate points with this card that I can redeem for cold hard cash (which I do)..and that's it !

[John]

Oh yes they are. A very EVIL concept that'll piss you off more than any mortgage or car loan ever will.

Or at least maybe it's just me.

I agree the concept is evil. I have a visa that is linked to my wifes play money checking account. That way when she overdrafts it my card will cover it and I just pay it at the end of the month.

Yes we have a joint account also, but this way she's not overdrawng it and should know how much money she can blow. It's like her allowance!