Anyone here try a money merge account?

[lykaon78]

I don't want to advertise so google it if you need to know more.

Has anyone tried this with any success? In theory it makes sense.

Sounds like you use a home equity line of credit to pay down your 1st morgage in lump sums and use a timing scheme to keep the home equity l.o.c. funded with your direct deposited paychecks. Basically it seems your 1st mortgage gets the benefit of the interest rate "float" and not the bank.

 

[kranky]

Yeah, I've looked into this. The problem is that it's impossible today to get a HELOC with an interest rate very close to the rate for a fixed rate mortgage, which I believe is the key to making it work.

It is based on the fact that your HELOC interest varies with the daily balance, but your first mortgage only changes on the first of the month. So you draw on your HELOC to pay against your first mortgage, then deposit all your income into the HELOC. As your deposits hit the HELOC, your outstanding balance goes down and so does the interest you owe.

It's also known as the Tardis (maybe spelled Tardus) system or an offset mortgage.

There's serious risk in that the HELOC has a variable rate and what might start out as an attractive idea could go in the dumper if rates go up while you have a large balance on the HELOC.

Like I said, I looked into it but the math didn't work.