Geek and Cheap » Scams http://www.geekandcheap.com A Geek's Guide to Money, Investing and Technology Sat, 02 Jan 2010 21:16:42 +0000 http://wordpress.org/?v=2.9.1 en hourly 1 Paying off your mortgage in 7-10 years — too good to be true? http://www.geekandcheap.com/2007/paying-off-your-mortgage-in-7-years-too-good-to-be-true/ http://www.geekandcheap.com/2007/paying-off-your-mortgage-in-7-years-too-good-to-be-true/#comments Wed, 17 Oct 2007 12:21:58 +0000 admin http://www.geekandcheap.com/?p=6 For fun, I recently went to a “seminar” for a company which advertised that they will help you pay off your mortgage in a significantly reduced amount of time. There are several companies which are touting this “revolutionary” idea. The general gist of this product is that you open up a Home Equity Line of Credit (HELOC) with your bank and you then use it as a checking account to pay down all your bills. These companies then offer a software program that tells you when you need to transfer money between accounts to utilize your money for the longest amount of time possible. They threw around the term “discretionary” income and showed that if an extra $800/month were paid toward the principle, your mortgage would be paid off in no time. What they failed to mention is the fact that you are still paying extra towards your mortgage no matter if you have a HELOC or not. I don’t think the people in the “seminar” realized that if they just set aside some extra money they could effectively do this exact same thing, and not have to pay the upfront cost to this “company” of $3500!!! Yep, that’s right. That is a lot of money, and money that I could use to pay down my mortgage! They say that this money comes directly out of the HELOC so it is like you are not really paying it. But guess what, you are and it is money taken out against your house. What happened if you weren’t able to pay those bills through the HELOC – you would lose your home plain and simple. You are turning unsecured debts such as credit cards into secured debts by rolling them into a HELOC.

There is also an entire other element to this scenario that I don’t have time to get into completely. This is really just a Multi-Level Marketing scheme and the people that are trying to get you to do this with your mortgage are making a lot of money off of you going through with this program.

These companies try to paint a pretty picture of paying your mortgage off early. The problem is that this takes discipline and if you have that discipline and discretionary income you do not need this program. So save yourself the $3500 and put it towards the principle each month and watch that balance fall.

Share/Bookmark

]]> http://www.geekandcheap.com/2007/paying-off-your-mortgage-in-7-years-too-good-to-be-true/feed/ 0