Here’s an email I received about something that was making the rounds years ago, but is still apparently out there. It concerns a system for shuffling debts to pay off a mortgage early.

Subject: Using HELOC for mortgage payment?
Message: I have seen this on TV news shows, used to pay off mortgage in five to seven years. Is it a scam? Does it work? Thanks. – Jerry

I’ll give you an answer, Jerry, along with some sources you can read yourself. But first, check out a video I did awhile back that includes three tips to pay off your mortgage early.

Watch the video of ‘Ask Stacy: Should I Buy a Mortgage Acceleration Program?’ on MoneyTalksNews.com.

Now, on to Jerry’s question.

When I first researched this years ago, I started by doing a Web search for exactly what Jerry used as the subject of his email: “Using HELOC for mortgage payment.”

One of the links returned was to an article on wikiHow called “How to Follow the Mortgage Accelerator Plus Program.” The article starts like this:

We were taught to pay our mortgage payment entirely the wrong way. Using mortgage acceleration strategies, you can save thousands of dollars in interest and pay off your mortgage in a third [of] the time using the money you already make and not changing your lifestyle.

Sounds good so far. But after four convoluted steps, here’s how the author summarized the “system.” It assumes that you have a \$200,000 mortgage, a \$5,000 monthly paycheck, a mortgage payment of \$1,000 a month, and other expenses of \$2,000 a month.

• You put your entire \$5,000 paycheck into your mortgage of \$200,000.
• Your new mortgage balance is now \$195,000.
• You put all your \$2,000 of monthly “spendings” on a credit card.
• You have a \$1,000 mortgage payment for a total of \$3,000/month in payments.
• You use your HELOC to pay the credit card bill and the mortgage payment.

Your new TOTAL mortgage balances are:

• First lien of \$195,000.
• Second lien HELOC of \$3,000.
• Total = \$198,000.
• Pay off the balance of the HELOC.
• In February, you get your paycheck again, but this time, put it entirely into your HELOC while keeping the balance of your first mortgage at \$195,000 which is already saving you interest. With our balance of \$3,000 and our positive cash flow of \$2,000, the HELOC will be paid back to \$0 in, technically, a month and [a] half. Then you can continue the process of putting your paycheck into your mortgage.

Get it? If not, don’t feel bad. It makes no sense to me, either.

Let’s stop and look at the big picture: What this person is telling us to do is use our entire paycheck to pay down our mortgage, then borrow the money to pay our bills. If we do that, at the end of the month we’ll owe \$3,000 on our credit line and \$195,000 on our mortgage for a total of \$198,000. Which is the exact same amount we’d owe if we took our \$2,000 positive cash flow and applied it to our mortgage balance.

These programs are supposed to work by exploiting subtle differences regarding how interest is computed between home equity lines of credit and traditional mortgages. The sales blather insists that exploiting that difference can pay off your mortgage magically early.

Of course, the magic isn’t free. From the tips section of the wiki post:

Talk to a professional! There are certified mortgage acceleration specialists that can show you the right way and the wrong way of doing things. There are multiple sources out there and they will tell the benefits and drawbacks of all of them.

In other words, there are people who sell programs – often for thousands of dollars – that are supposed to help you unlock the “secret” of using debt to accelerate the repayment of your debts.

Also uncovered by my Web search was an article by The Mortgage Insider about these types of programs. Here’s part of what they had to say about something similar called a “money merge account” or MMA.

As with most scams, a little bit of truth is necessary to sell the mark. … Yes, a HELOC charges interest a different way. However, can one really conclude an actionable difference exists that is so powerful the average homeowner can pay off their mortgage in seven years?

Absolutely not. It’s ridiculous to even suggest it.

So there you have it, Jerry. Another silly idea championed by people too lazy to make an honest living.

If you really want to pay off your mortgage early, do the same thing you’d do to pay off any debt early: Make extra principal payments as often as you can.

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