Interest Arbitrage And The Money Merge Account
When you open a savings account at 1% - 2% interest, the bank takes that money and deposits it into a "sweep account" where they will then redirect it to other investments or loan it to the consumer (maybe you) at say, 9%. So they are "borrowing" (holding your savings) at 2% and earning at 9%. That means that with regard to your business the bank is earning that 7% spread. One of the concepts that we need to use in our daily lives is what the banks use every day; interest arbitrage.
Now, I have nothing against banks. I love banks. Without banks we would not be able to drive our beautiful cars to our beautiful homes. Banks give us the opportunity to obtain the things in life that elevate our standard of living. But beyond that, it is up to us to be smart and use the tools at hand to position our money to work for us not the bank.
So again as an example, if I came to you today and said that I have a bank that will loan you money at 4% and you know of a bank down the street where you can put your money in an account and earn 6%. You’ll earn that 2% spread. This is interest arbitrage. Another concept to understand is that when it comes to our mortgage, cancelling interest is the same as earning interest…to the penny.
The Money Merge Account program employs these two concepts in accelerating a mortgage payoff. In the way interest is calculated on an open line of credit such as a HELOC, versus the way interest is calculated on a closed end loan such as a first mortgage, we are able have some control as to how much we actually end up paying in interest on that home.
By using the HELOC as a checking / savings account along with the Money Merge Account software, we are able to move relatively small increments of debt from the first mortgage to the HELOC whereby changing the way the interest is calculated on that debt. By moving that debt in a controlled and responsible manner, based on your cashflow and guided by the web- based Money Merge Account software, we are able to offset large portions of interest and potentially save thousands of dollars.
This is not a "magic bullet", it is a tool. The homeowner will end up paying 100% of the principal on their loan and will still need to handle their money in a responsible manner. But with the Money Merge Account program, they could stand to save a great deal in interest on that mortgage.
I hope you have found this article interesting and informative. If you have any questions do not hesitate to contact me.
-Greg Campbell
By: gcampbell
Article Directory: http://www.articledashboard.com
Greg Campbell is a San Diego based entrepreneur, independent agent for United First Financial, surfer and father of 2. Greg has been in the real estate and mortgage industry for many years. With the emerging real estate mortgage debt America is accumulating, Greg has shifted his focus on helping people overcome their financial bondage. For more info or to contact Greg, visit: www.DissolveYourMortgage.com
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