What Is HELOC and MMA?
HELOC is short for "home equity line of credit," a way to borrow money against the value of your house. A Money Merge Account (MMA) is a type of financial product known as a mortgage accelerator.
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HELOC
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In a typical HELOC, a lender lets you borrow money up to a maximum amount, using your home as collateral. You don't borrow it all at once; you take what you need as you need it, and you repay it later.
Accelerator
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In a mortgage accelerator, you pay all your expenses with money drawn from a HELOC. Your paychecks are deposited directly into an account, which repays the money drawn from your HELOC, then uses the rest to pay down the principal on your home.
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Purpose
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The purpose of an accelerator is to steer you toward paying off your mortgage early by paying down the principal.
MMA
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The Money Merge Account is a mortgage accelerator marketed by a company called United First Financial, which is not a bank.
Costs
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Customers who start an MMA must pay $3,500 for a software package that purports to analyze their finances and guide them in their spending. They also pay interest on the HELOC and fees.
Expert Insight
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Any financially disciplined homeowner can pay extra on a mortgage without needing an accelerator, especially one that costs $3,500 upfront, according to "Kiplinger's Personal Finance" magazine. And Bankrate.com notes that financial institutions offer accelerators for as little as $30 a year.
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