Profile picture for Barabas63

What positiv and negotiv about EMPP (early mortgage pay off plan)

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June 28 2010 - US
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Profile picture for arday4
Wayne,

In the 20 years that our company and staff has been administering the Early Mortgage Pay-Off Plan, we have fined tuned the procedures, methods and tracking of the customer's payments.  There are no computer glitches, the checks and balances are in place to ensure that never happens, the funds are managed through an ACH drafting process and placed in a secure trust account until the mortgage is paid either electronically or if the individual lender does not accept electronic payment, we pay by check when due.

We will get the payment there on time.  If a customer notifies us with a payment posting problem, we then advocate on their behalf to correct the issue.  Once we are aware there is a problem we act quickly to correct the problem so there is no negative credit reporting.  Because we have worked with thousands of lenders and have made millions of payments our relationship with lenders ensures that we are able to strongly advocate for our customers. 

Our records and tracking show when their payment is sent and when it is received.  This is information our customer service representatives use when advocating for our clients.

You may not realize that a consumer uses a third party to make their payments whether it is us, their bank, or the post office.  We keep the records to prove the payments have been made on time and we use that proof on behalf of our customers.





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June 30 2010
Andrew,
How do you correct a credit score that tanks because of computer glitch on your part that doesn't post the payment on time?  The agreement the consumer has on a promissory note is with the mortgage lender not a third party.  Turning over that obligation to an outside source that doesn't have a similiar liability borders on stupidy, particularly when the consumer can do the same payment plan for zero cost.......
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June 30 2010
Profile picture for arday4
You are correct transparency is the key, anyone that enrolls in our program has the ability to calculate their own savings on our online calculator, or any other bi-weekly payment calculator.  Our service is simple and straight forward that if correctly implemented will produce guaranteed results. 

You are correct in the fact that rates are low today, however we have many clients with higher rates and are unable to refinance because they lack either equity in their property, can't get an appraisal value that works or have a poor credit score, all circumstances that can result in higher rates than 4.25%.

I am forced to use an arbitrary range when exemplifying results and qualify the statement with "usually" because as you point out there are a wide range of loan situations that produce a wide array of interest savings and time savings when implementing our service.
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June 30 2010
" The main benefits are the mortgage interest savings, which are substantial usually $50-100,000 depending on your mortgage particulars, as well as substantial time saved on your mortgage, usually a pay off of 7-10 years early. "

Andrew Day, you are a good salesman. However, even though you use the word usually in your claim of a payoff of 7-10 years early, it is not usual when rates are at the level they are today or even 5% or 6%, it is 4.2 years earlier at 4.25% as you just pointed out. Yes, you could still meet the 7-10 year claim by having the client apply additional principal ON TOP OF setting up a biweekly but that is not the premise. You need a rate of 7.625% to meet the minimum claim of 7 years early without additional principal payments so maybe your ads should read 4.2-10 years early instead of 7-10 years early. The word " transparent" coupled with mortgages is more relevant today than in the past.
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June 30 2010
Profile picture for arday4
I posted this response to Clay in another thread in which he asked the same question, I thought it was important to address his point:

@Clay

It is true that with a low interest rate such as 4.25% the savings both on time and interest are less.  Take for example a 30 year mortgage, a $300,000 loan amount.  The approximate savings will be as follows depending on P&I payments: A person can pay off their mortgage in 25.8 years instead of 30, 4.2 years sooner, save $37,000 in interest.  Many people in our program also add extra principal to their bi-weekly payments, an extra 20 dollars every two weeks would save that person an extra year and an extra $10,000.
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June 30 2010
Profile picture for arday4
Different results can be reached depending on loan particulars, it is true that if you have a 4% loan the results are less if you have a higher interest rate. Unfortunately many people do have a high interest rate for many reasons.  Our program is convenient for people that want the help to budget their mortgage payments either because of the ease in matching up the drafting periods with their pay check, or because of the discipline it provides to ensure the results.  Our program unlike others in the industry apply extra principal payments right away so that additional interest is not earned by holding those funds. This program is not for everybody as there are people that pay off their mortgage on their own every day, but many people either do not or can not stay on the necessary payment track on their own or would just rather have someone else do it for them.
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June 30 2010
"Gentlmen, We need to protect our phony bolony jobs!"
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June 29 2010
So if I understand how this works EMPP charges you to withdraw your payment every two weeks. Then while they are holding your money how much additional income do they generate on the funds they hold until it is time (once per month) to make your payment?  They should be paying you for the use of your funds not charging you?  Save the fee and make your own additional payments, increase your monthly payment by 1/12 and shorten a 30 year mortgage just like EMPP.
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June 29 2010
I will correct my own math, the 4.25% rate 30 yr term would payoff in 25.6 years, not exactly 7 years early. The 10 year reduction would work if the note rate was 10.75%, agree?
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June 29 2010
@ Andrew, you state a person can payoff their mortgage 7-10 years early using EMPP. If you are only changing the monthly payment to biweekly payments, isnt it true you would only reduce the term 2.2 years given a 30 year mortgage at 4.25%? If my math is wrong please correct me.
Also, in order to reduce it 10 years ( the 7-10 year claim ) wouldn't you need a note rate of 12.5%?  
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June 29 2010
Profile picture for sunnyview
People who are interested in learning more about biweekly mortgage payment can read more about it here.
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June 29 2010
Profile picture for sunnyview
Paying a fee is silly if the same service is available for free or when a homeowner can simply fill in an additional principal amount once a month when they pay their mortgage. No trust of the banking system is involved when payments are automatically applied to your account. Wells Fargo for example would have sent out a statement every month showing how much was being applied to principal. Prepayment is easy and can be done successfully for free. 
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June 29 2010
Profile picture for arday4
The EMPP (Early Mortgage Pay-Off Plan) has many positive aspects that have not been noted in the previous answers.  The main benefits are the mortgage interest savings, which are substantial usually $50-100,000 depending on your mortgage particulars, as well as substantial time saved on your mortgage, usually a pay off of 7-10 years early.

There are a few benefits with The Early Mortgage Pay-Off Plan in particular that should not be missed.  EMPP is the original institutional bi-weekly program, and has a spotless track record serving hundreds of thousands of homeowners.  The original Early Mortgage Pay-Off Plan through Hometivity works directly for the homeowner and not the bank, thereby avoiding an obvious moral hazard by having a bank such as Wells Fargo as mentioned below, applying extra principal payments and reducing their interest income.  Another benefit is that you can use the Early Mortgage Pay-Off Plan with any bank and any lender, not the case with Wells Fargo.

The secret to the success and true benefit of the Early Mortgage Pay-Off Plan is the automated service.  By automatically and securely drafting your bank account every two weeks and paying your mortgage on time every month, you are assured that you will achieve the desired interest saving results.  Ask anyone if they are able to stick to a schedule of paying their mortgage early over 20 years and they will tell you its almost impossible.  The small fee that is charged is very little as compared to the savings a homeowner can expect and the ease of the service.
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June 29 2010
Profile picture for sunnyview
I looked at an EMPP through Well Fargo. They were offering no fee for set up which was nice. The positives were that it would cut time off of your mortgage term and they would do automatic transfers of funds on the due date.

The negatives were that they took two extra half payments out a year. That was the main reason that I passed. That extra half payments would have made budgets for those two months difficult. Instead, I opted to cut my mortgage term without EMPP by making extra principal payments with my regular mortgage. I took the amount of one mortgage payment divided by it by 12 and I send that to principal each month with my regular payment. You can also do one additional mortgage payment a year when your tax refund comes to cut time off. You can figure out how much you can save by paying extra principal monthly here or how much you can save by paying an extra yearly or quarterly payment here.
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June 29 2010
Profile picture for wetdawgs
In order to enroll in the program you have to pay $295 upfront and a one dollar service fee for every payment ($26/year).   This is paying someone to do something that you can do yourself.    If your mortgage has no penalty for early payoff, simply add principal to your mortgage payment every month (or pay twice a month).

The advantage of doing it yourself is that if you have a tight month, you can vary the amount of extra principal added.
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June 28 2010
 
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