JoeTaxpayer

Earlier this month, I mentioned the Money Merge Account program on my feature site, and, as frequently happens, I find a magazine article coming to a similar conclusion.

The May issue of Kiplinger’s Personal Finance magazine has a brief article titled “Don’t fall for this mortgage pitch.” It’s a pretty brief article which again questions whether even prepaying at all is a good idea, but concludes with this punchline; “Salespeople challenge whether you’ll follow through on your own - as if spending $3500 for software will ensure that you’ll use it. Tell that to couch potatoes whose high-end exercise equipment gathers dust.” Amen to that.

I’ve also added links to highly trafficked discussions regarding this topic, and also written a stand-alone page comparing one MMA agent’s example to my own approach using a spreadsheet. I don’t know what surprises me more, that the shortcoming of such systems is so obvious, or that people are so desperate they’ll pay $3500 for something they can do with a free spreadsheet. I am happy to send a copy of my MMA spreadsheet to anyone that requests it.

(updated 5/4 - I added the link to the article above as the May issue of Kiplinger is now accessible on the web.)

Joe

written by JOE \\ tags: bi-weekly mortgage, Finance, foreclosure, Investing, jferheart, money, money merge account, Mortgage, Subprime

My March feature article discusses Money Merge Accounts. This system came to my attention a few months back in the form of a question on a usenet newsgroup. Since then, I’ve gotten as much information as I’ve been able to uncover and am staying with my gut reaction, that if one has the money and desire to pay their mortgage off early, they would be best off doing it on their own. I’ve also spent some time and created an MMA spreadsheet which will let you enter your own number and decide for yourself. Add a comment to request a copy. If it helps you save $3500, please donate $35 to your favorite charity in my name.

In other feature articles, I’ve discussed Bi-Weekly Mortgages, and the general topic of pre-paying one’s mortgage. The larger message here is that there are many approaches to take, but whatever you choose to do needs to be in the larger context of the rest of your financial situation.

Note: I’ve added a page on the sidebar with links to sites that discuss MMA in greater detail.

JOE

written by JOE \\ tags: dave ramsey, Finance, foreclosure, fraud, Investing, jferheart, money, Mortgage, scam, Subprime

In the March issue of Smart Money, there was an article “10 Things Your Tax Preparer Won’t Tell You,” which, like many articles in this series takes a shot at the least reputable people in a given profession. What caught my eye reading this story was this one sentence “On average tax preparers make more mistakes, and costlier ones, than Josie Taxpayer does.” I quickly Googled “Josie Taxpayer” and found two results, both referencing Joe and Josie Taxpayer, as the Smart Money story had not hit the web yet. I found the avoidance of the phrase Joe Taxpayer interesting, as I’m sure it was intentional. Just my random observation today.

JOE

written by JOE \\ tags: Finance, foreclosure, mma, Mortgage, mortgage acceleration, pre-pay, Real Estate, sub-prime loans

This month’s Consumer Reports has an article “Your mortgage, It rarely pays to prepay“. They think it doesn’t, suggesting that since the stock market (measured by the S&P) has averaged 10% per year over the last 20 years, that it would make financial sense to choose investing in the stock market over pre-paying your mortgage. On one hand, there’s a neat logic to this. But, as I posted in my blog article Disappointing Results, we see that despite the 11.8% return of the S&P cited by the study, the average equity fund investor only saw a return of 4.3%. In that case, CR might rethink their numbers and their blanket statements offering what may be unsound financial advice.

Whatever you decide, the decision has to be based on your individual situation, your risk tolerance, and investing style.

JOE

written by JOE \\ tags: Finance, foreclosure, mma, Mortgage, mortgage acceleration, pre-pay, Real Estate, sub-prime loans

I’ve finished up another article for my main site, this month titled BiWeekly Mortgages. I’ll give you the punchline here. I have no objection to paying one’s mortgage down faster if the rest of their investments and debts are in order. Why pay down a 6% or 7% mortgage faster when you owe money on a 15% credit card?
What I do object to is paying a third party or your bank an extra fee plus monthly service charges when you can do this your self. I mention other mortgage acceleration programs such as Money Merge Accounts, which I’m still researching and will discuss here or on the main site in the near future.
JOE

written by JOE \\ tags: Finance, foreclosure, mma, Mortgage, mortgage acceleration, pre-pay, Real Estate, sub-prime loans

A short sale of one’s home is different than we use the term ’short sale’ when referring to stocks. When you sell a stock short, you sell a stock you do not own, and hope it goes down so you buy it back at a lower cost.

A short sale of a house is when the sale price is not enough to cover the mortgage balance and the bank just accepts the sale price forgiving the balance owed. I wrote back in November that the unfortunate seller still had another issue. He had to pay tax on the forgiven amount. Now, thanks to the Mortgage Forgiveness Debt Relief Act of 2007, there is a three year exclusion for this situation, and no tax is due.
JOE

written by JOE \\ tags: Finance, foreclosure, Investing, money, Mortgage, Subprime

A homeowner owes $200,000 and for whatever reason, finds he can no longer pay the mortgage. The bank accepts the deed in lieu of foreclosure and sells the house for $150,000. The homeowner breathes a sigh of relief to be out, but in January receives a 1099. He now has taxable income for the amount of money he cannot afford to pay the bank. Surely the tax on $50,000 is a better deal than the whole $50,000, but for the guy who couldn’t come up with the $1500 mortgage payment each month, where is he supposed to find the $12,500 (I’m assuming a 25% tax bracket) to pay the tax due?
Congress is considering legislation that would change the law that taxes the loan amount which goes unpaid, but that’s not likely to happen overnight.
Enjoy the weekend,
JOE

written by JOE \\ tags: Finance, foreclosure, Mortgage, Real Estate, sub-prime loans