Connect with us

Economic News

Mortgage Acceleration: Is the Latest Fad Right for You?



mortgage acceleration

There has been a lot of talk over the last year or so about various mortgage acceleration programs, in fact, I have talked about them since last February (2007) myself. Fueled by United First Financial’s Money Merge Account marketing through an MLM style set up, the latest fad or craze has grown dramatically, leaving one to question whether or not it truly is the best thing out there.

Personally, I have fielded hundreds of emails from the first day I posted about these products. Most were from homeowners wondering if it was the right fit for them. Every “hate” mail I received was from a UFF agent, except a few from other mortgage acceleration advocates, even though I never said the product didn’t work.Why? Because I said they were not the best solution, and they aren’t for most people. The laws of money work against them. And that is even more true today.

You see, every dollar you spend towards your mortgage is a dollar you didn’t invest. That means that while you are dumping money into your mortgage, you miss opportunities to make more money elsewhere, and there are plenty of opportunities, even in today’s environment.

Add to the fact that once your mortgage is paid off, you have nothing left. If you had been investing instead, and we’ll just say your rate of return equaled your mortgage for simplicity sake, you would still be able to pay off your mortgage at the same time, but may not want to. If you had started with a $200,000 mortgage, at the mortgage payoff point you would have nothing in investments, whereas if you had invested, you would have $200,000 working for you already. In fact, using the same rate of return, even if you were to dump all of your mortgage payment in at this time, you wouldn’t be able to catch up.

Now, as for liquidity (immediate cash accessible), you have very little, if any, using the mortgage acceleration programs, and the bank can even choose to freeze withdrawals, rendering your entire plan useless. Just read the paper and you can see this happening, even on those with plenty of equity.

Investing can provide more liquidity, which can be used to get you through a financial crisis. Just ask your self this question, which would you rather have, $100,000 in your home or $100,000 cash? Ask anyone getting laid off or facing another type of financial crisis and you will know what their answer is.

What about the flexibility you have by not paying off your mortgage as fast as possible? You have control of your money, not the bank, leaving you the ability to seize opportunities. If your money is locked in your home, you have to “qualify” to get it back out, and you can bet that is getting harder to do these days.

I could go on and on about why mortgage acceleration programs, no matter which ones you use, are not the best options out there. That being said, they are good for some. Who? Those who have very little understanding of how money works, don’t want to learn, and simply remain focused solely on having their mortgage paid off.

Writer for national real estate opinion column, focusing on the improvement of the real estate industry by educating peers about technology, real estate legislation, ethics, practices and brokerage with the end result being that consumers have a better experience.

Continue Reading


  1. Mark Harrison

    April 19, 2008 at 8:43 am


    I’d better start by clarifying a couple of things – 1: I’m in the UK, not the US, and 2: I’m a property investor (landlord), and have been for many, many years. Hence the mortgages I’m used to taking out aren’t quite the same as US ones – in particular, there are next to no long-term fixed rate products available here – about the longest available is a three-year rate fix.

    I’m aghast at the product you describe – for my own house I have a “flexible mortgage” – that’s to say one on which I can (and do) overpay… but with two extra features:

    1: Interest is calculated daily, so overpayment (or withdrawals) take instant effect.

    2: Full liquidity is guaranteed, to the extent that it comes with a cheque book and telephone banking, and I can use it as if it were a standard bank account if I want to.

    I fully agree with your analysis – while I know that some people just overpay to be mortgage-free young, I use mine as a revolving credit facility – I make extra payments in when I have spare cash, but then use the “available balance” for investment. Truth be told, because my specialism is UK rental property, there’s not been much worth buying over the last couple of years, but with the market crash happening, bargains are coming round again.



  2. Mike Mueller

    April 19, 2008 at 9:20 am

    Excellent Robert ! Excellent!

  3. Robert D. Ashby

    April 19, 2008 at 12:27 pm

    Mark – Sounds like you have a good handle on your finances and since I know very little of the UK market, I am going to leave it at that. Thanks for bringing your viewpoint.

    Mike – Thanks.

  4. Bob in San Diego

    April 20, 2008 at 11:58 am

    Robert, your spot on analysis makes the debate a no brainer.

  5. Genuine Chris Johnson

    April 20, 2008 at 5:30 pm

    Good. Not a shill. I was worried when i saw this in twitter.

    I think that for some people, paying their mortgage off quickly makes sense, as given their appetite for risk, it is an uncomfortable proposition. That said, I think most of these programs are scams.

  6. Derek Bough

    April 21, 2008 at 10:44 am

    I agree with most all of what you have said in this post. Many prepayment programs leave the borrower facing a choice. Do they focus on paying their home off early and give up the opportunity cost of those dollars or do they stay leveraged to the hilt and funnel all of their extra cash into other investments? Most of the individuals promoting these programs are focused solely on the acceleration of the mortgage instead of efficient equity management.
    Mark, on the other hand, brings up a valid point about the way mortgages work in the UK. By having a mortgage that functions as a “revolving credit facility”, borrowers are able to efficiently manage their equity, having access to it for changing cash needs, as well as investment opportunities. The result is a shift from static obligations to a dynamic relationship between both sides of their balance sheet.

  7. Jayson

    April 21, 2008 at 11:27 am

    Nice post and great points. This is an endless argument and for some reason it always gets heated. One self-proclaimed “real estate guru” I talk to from time-to-time swears that these programs are great (not sure why he’s a guru?) and many others hate the programs. I think, as you said, these programs are great for some and terrible for others.

  8. Glenn fm Naples

    April 22, 2008 at 2:18 pm

    Bob – quick and easy access to cash in today’s economic environment is very important. In fact, some experts are saying consumers today should have about one year’s net income in investments that can quickly have the cash accessed.

    Some of the thinking goes back to the 15 year mortgage will save thousands of dollars over the lifetime of the loan versus a 30 year mortgage. So people think saving the interest. They do not consider income tax effects.

    People should think about the global aspects rather than just the cash in and cash out aspects of transactions.

  9. Braxton Haines

    June 11, 2008 at 12:53 am

    Robert, great post! I’ve recently started making additional principal payment toward my mortgage. I was spurred to do this through the high volatility of the stock market as of late and thanks to having a little bit extra cash flow. There are so many pros and cons of each option, I’d love to hear some more of your comments on each.

  10. Toby

    October 15, 2008 at 11:13 pm

    I have been reviewing this topic for the past few months and have found over 10 companies that sell a mortgage acceleration software program ranging in the price from $200 to $3500. I am biased towards the programs and feel they are worthwhile to look into for someone whose goals is to get out of debt more quickly.

    I have a Roth IRA, retirement plan with my work, put money away for my kids college education, and save money for a rainy day. Recently I have decided that my primary focus is to get out of debt as soon as possible. I am a little more hesitant these days to investment my discretionary income into investments with the way the economy is right now. I can be out of debt in 6 years by following a mortgage acceleration program. That is very appealing with the way the economy is right now.

  11. Glenn fm Estero

    October 16, 2008 at 3:24 pm

    @Toby – you should try to determine interest being charged versus interest being paid and get rid of the debts with a higher interest rate than you are earning.

  12. Tom Voli

    January 7, 2009 at 4:45 pm

    Very good thread.

    What people here understand clearly is that using a equity line in second position does not provide enough (if any) liquidity to be the best form of acceleration. It does enable those with low risk tolerance a way to get out of debt quicker which is typically the motive of such a person. However, as Mark Harrison suggests, there are products,even here in the USA, that will provide full liquidity and are not an arm and a leg. While I totally agree there are many better places to earn a higher rate of return than by offsetting the low rates we have now, an equity line in 1st position provides an excellent holding account until such opportunities arise. It really comes down to risk tolerance and financial objectives. That varies so greatly that no 1 solution is right for everyone.

  13. Bill Beavers

    May 26, 2009 at 12:07 pm

    You have a number of comments and I don’t wish to be one of “those” UFirst agents so I will simply say: “Canceling Interest is the same as Earning Interest.” Every dollar of interest canceled is a dollar that stays in your pocket. Plus, not a great time for investing I wouldn’t think. Thanks very much.

  14. Bill Beavers

    May 26, 2009 at 12:09 pm

    Sorry, forgot to subscribe. Thanks

  15. Robert D. Ashby

    May 27, 2009 at 6:26 am


    You claim to not want to be “one of those UFirst Agents”, yet you are. Here is your the typical Money Merge Account argument I hear these days…

    “I will simply say: “Canceling Interest is the same as Earning Interest.” Every dollar of interest canceled is a dollar that stays in your pocket. Plus, not a great time for investing I wouldn’t think.”

    Wrong thinking, folks. Investing and paying off your mortgage are not the same and never can be. Rather than write a lengthy reply as to why, check out this post I did a short time ago over at Florida Mortgage Report (click link above) and read Money Merge Accounts: More Misleading Information dated May 10, 2009.

    Also, anytime is a good time to be investing, the only thing that changes is what you invest in. If you do your research, you can far exceed what your mortgage costs, hands down.

    Oh, Bill, and if you didn’t want to be one of those UFF agents, why did you comment on this with a link directly to your UFF website?

  16. Brian

    October 13, 2009 at 1:03 pm

    Not seeing many benefits here.

Leave a Reply

Your email address will not be published. Required fields are marked *

Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?



NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<


Continue Reading

Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.



young executives

job openings

Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.


Continue Reading

Economic News

Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.



gas tax


Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.


Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.

Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.

“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”

Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.

Continue Reading

Our Great Partners

American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Emerging Stories

Get The American Genius
neatly in your inbox

Subscribe to get business and tech updates, breaking stories, and more!