Money Merge Account Basics

• Money merge accounts are a way to reduce the amount you pay on a mortgage over the course of the loan and reduce the number of years you pay on the loan. It does this without altering your monthly budget. Many confuse these accounts with bi-weekly payment plans, but they are not the same. Money merge accounts set up an equity line against the home value, then collect all incoming receipts to merge them in the equity line account. From here, bills are paid and the remainder of the balance is applied to principal.
  
  

The Numbers

• Whether you decide to use a money merge account service, do this yourself or make additional payments on mortgage principal, it makes sense to pay off a mortgage debt as fast as you can. Homeowners, on average, pay more than double the value of their home over the course of a 30-year mortgage. This cost of lending can play into a person's long-term goals of savings. Imagine saving $300,000 over 15 years because you didn't need to continue making mortgage payments! Money merge accounts force you to be frugal and do just this.
  
  

How Your Money is Merged

• Assume you had an income of $4,000 a month with a mortgage of $1,700 each month. With the money merge account, your income goes into the equity line account where you have been drawing on the credit line to pay your $1,500 in monthly expenses (excluding the mortgage). Your income pays off the credit line and then takes the remainder of the money and applies it to your mortgage: first the payment of $1,700, then the remaining $800 earned additionally. This reduces the mortgage principal by more than $7,200 annually. This does not affect liquidity needs, because you can access the credit line for emergency capital when needed.
  
  

Do-It -ourself Option

• Money merge account programs are not free. You pay from $2,000 to $4,500 to get into the program that does nothing more than manage your money for you. You are still able use funds for things outside of the mortgage by using the credit line, which gets paid off at the next income merge. The service eventually costs an additional month's mortgage in service fees, which is not a lot when you consider that you can reduce your mortgage by 10 to 15 years. This is a system that a person does not have to pay for if he has disciplined money management skills.