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Next in Line
ParticipantMy feel is that – as with all things – discipline is the key. The main idea is the company wants to sell its proprietary software at inflated prices and capitalize on a down market. That being a given…
Example:
If I have a 300,000 dollar mortgage and I net 5,000 dollars a month and have fixed expenses of 4,000 dollars per month. My discretionary income is 1,000 per month. I either have or open a HELOC. Month 1: I make a lump sum payment to principal of say 3,000 dollars. Now my HELOC balance is 6,500 dollars (Lump sum payment + cost of software 3,500! – outrageous I know). I then deposit my total income (5,000) as a payment to the HELOC – now the HELOC balance is 1,000 – this is the amount I owe and additional payment towards – but everything else is paid. Month 2 (this schedule is for example purposes only) I don’t make additional payments to principal I just draw fixed expenses from the HELOC and deposit my income as payment to the HELOC. Month 3 I make additional payment to principal of 2,000 dollars. So the idea is without any change to my current standard of living I can rapidly pay down my mortgage – and the overpriced software holds-my-hand through the whole process.Upon hearing this concept which on the face seemed to the skeptic in me said too good to be true…why wouldn’t this be more widely used? The company says banks don’t what you to know – but that’s what I expect them to say –us against the banks.
Participantkicksavedave,
You are correct on all points. In reviewing the responses on this board I realize that I might have 2 distinct questions. The first is does this concept of the Money Merge (Using a HELOC as your checking account)work or is it a gimmick. Second is has anyone used one and from what companies (I’d like to explore a known entity rather than and unknown? Thanks.
ParticipantThat’s exactly the system. I’d love to know if it works. It seems logical that (and someone maybe no_such_reality) stated that you need to spend less than you earn at least a roughly a 10% savings rate. A little discipline would go a long with this as well. I like the rational skepticism on this board and figured someone could tease out the BS.
Participantpowayseller,
Thanks for the welcome. It was more of a joke – I like this blog because there are some serious thinkers and it seems some industry people. Some of the blogs I’ve seen on this subject are total rants with little info, analysis or critical thinking. After all we (bears) could be wrong or only half right about a downturn. I’m not up on SD, I live in OC and I think we are “Next in Line” for some yoy declines. I will keep my eye out for articles – old and new. One last thing I got interested in this topic since 1/2 to 2/3 of everyone I know have gone into real estate for part or all of their income so I get some inside info and hear a lot of sales slogans.
ParticipantHi all,
I’m new to this site so take it easy on me. Along the lines of what should reporters ask there expects…I think it would be helpful if wee could keep track of past news articles. To that effect I have a couple that quote LAY. What she said in the first article and her recent “turn” give some insight to her view of current market conditions.
Panelists see housing market slowing North County Times – North San Diego and Southwest Riverside County News – NCTimes_com – Californian_com.htm
Note the last paragraph in light of recent increases in inventory.
“Price increases will slow, and may even be flat in some areas of the state, said the speakers, including Leslie Appleton-Young, chief economist for the California Association of Realtors. However, they said, economic fundamentals state and nationwide appear strong enough to prevent a downturn. And San Diego County is likely to put in a solid performance, although there’s reason to worry down the road.
Nearly all the others speaking said emphatically that there is no real estate “bubble.” The lone dissenter was Alan Gin, a USD professor of economics —- but even he said he doesn’t think it’s going to burst now “or in the foreseeable future.”
“There is one thing you need to get declining prices —- just one —- you need too much supply,” Appleton-Young said. “You need more homes for sale than there are buyers.”
And of course her (LAY) latest take on the market…
Housing Expert ‘Soft Landing’ Off Mark – Los Angeles Times.htm
“The Realtors association last month lowered its 2006 sales prediction from a 2% slip to a 16.8% drop. That was when Appleton-Young first told the San Diego Union-Tribune that she didn’t feel comfortable any longer using “soft landing.”
“I’m sorry I ever made that comment,” she said Thursday. “When I get my new term, I’ll let you know.”
If there’s one group in California still unreservedly bullish on real estate, it might be the throngs lining up to take the licensing exams.
The state Department of Real Estate recently reported that the total number of agents in the state passed 500,000 in May for the first time. That’s one agent for every 55 adults in the state.
Appleton-Young had no qualms about predicting a hard landing here: “We’re expecting a fairly significant shakeout.”
The shakeout could be very ugly depending on how many transactions are not just bad business but illegal/ criminal. Unfortunately those stories won’t be newsworthy until people start losing their homes.
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