Money Merge Accounts: A Good Way to Accelerate Your Mortgage Into Foreclosure?

I know I am going to get a lot of heat from the mortgage acceleration advocates out there, especially those selling the Money Merge Account. Why? Because this is a point they will never mention and will downplay forever saying it just cannot happen.

Reality, as often is the case, points toward this very possibility. Mortgage acceleration programs, not just the Money Merge Account (United First Financial – aka MMA), but also the Homeownership Accelerator (CMG – aka HOA) and every other program out there that says you can pay off your mortgage in as little as 1/3 the time, can easily place you dangerously close to a foreclosure, if not force you into a foreclosure if a financial crisis occurs and you are following the program to pay off your mortgage the fastest way possible.

How could this possibly be true?

Quite simply, these programs utilize all of your discretionary income to add extra principal payments against your mortgage, thus minimizing the interest paid and bringing the length of a mortgage down rapidly. It is your discretionary income that affords you the ability to pay off your mortgage quickly, not the programs themselves, which I have eluded to many times before.

Those following this program to a “T”, are leaving themselves with little or no emergency funds to tap into in cases of a financial crisis, such as job loss. Certainly, the chances of job loss have increased in recent times, as is evident with the climbing unemployment rate and months of dismal jobs reports.

Now, one argument that MMA and other mortgage acceleration advocates would point out is that you can tap into your HELOC (ALOC) as an emergency fund, or even worse, tap into a personal credit line. This is faulty thinking on many accounts. Number one, you shouldn’t rely on a HELOC as they can be frozen at any time and have been frozen on a lot of people, especially here in South Florida.

Another problem with HELOCs is that the ones used in this program are minimal, affording only a few months of living expenses before they are tapped out. With no cash readily available, it won’t take long for anyone following these programs that don’t have a true emergency fund in place to face the dilemma of not being able to pay off their mortgage, even if they can tap into that HELOC.

As for the personal line of credit, that is wrong an a wide variety of accounts. They are not tax deductible, carry higher interest rates in general, and usually can be frozen without warning just like HELOCS.

Hopefully, those of you reading this will change the way you handle your finances. If you don’t have a solid emergency fund in place, stop paying off that mortgage quickly and get one set up. Also, if you are looking into purchasing or following a mortgage acceleration plan, check other equity management strategies that provide you better opportunities to maintain liquidity, safety and even rates of return.

Developing a financial plan, then following it, changing it only as necessary to handle life events, is the key to your financial success. Your mortgage must play an integral role in that plan as mishandling of debt, especially your mortgage, can cost you hundreds of thousands of dollars over time as I have repeatedly shown. Strategic equity management can provide even more lucrative results than any mortgage acceleration program out there and keep you financially secure throughout.

Just think of this question…If you had a financial crisis right now, would your rather have $100,000 in accessible funds or $100,000 trapped in the walls of your home?

If you don’t think your home equity is trapped in the walls of your home, you haven’t been watching the news and/or haven’t realized that getting a mortgage is a lot harder these days.

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