Where Presidential Candidates Stand On Matters Of Money

In an election year, voting for a presidential candidate can be a lot like buying a home.

Both require a fair amount of analysis but -- in the end -- the decision is still highly emotional.

Using Bankrate.com's side-by-side candidate comparisons, some of that emotion could be replaced by fact.

In a gridded format, candidates are pitted head-to-head on the following topics:

• Education
• Jobs
• Health Care
• Social Security
• Taxes

The charts can help Americans get a better feel for where the candidates stand with respect to "pocketbook issues" that impact them personally in their businesses, their lives, and in their homes.

Opinions on the issues are current as of January 29, 2008. As with everything in politics, though, the candidate positions are subject to change.

What's Your After-Tax Mortgage Rate?

Many homeowners are entitled to two major tax deductions -- one for annual interest paid on a home loan, and another for real estate tax bills paid to government.

Calculating your approximate tax credit is basic:

1. Add mortgage interest paid and real estate taxes paid together
2. Find your marginal tax rate
3. Multiply your tax bracket by the sum of Step 1

So, for a homeowner that paid a combined $13,000 in mortgage interest and real estate taxes last year, and who is in the 28% marginal tax bracket, a tax credit of $3,640 may be due from the IRS.

This credit is one reason why some people sometimes refer to "after-tax mortgage rates". An after-tax mortgage rate is the adjusted interest rate after the IRS doles out credits and is calculated as follows:

(After-Tax Mortgage Rate) = (Mortgage Rate) * (1 - Marginal Tax Rate)

The same homeowner with a 6.000% mortgage rate, therefore, has an after-tax mortgage rate of 4.32%.

Because not every homeowner is eligible for mortgage interest and/or real estate tax deductions, and because not every homeowner should claim them, you should consult with your accountant to see how tax credits fit into your tax liability schedules.

Federal income taxes are highly personal and require the attention of an experienced professional.

Help Your Home Emotionally Connect To Buyers

The end of the Super Bowl kicks off the Real Estate Spring Buying Season.

As home sellers should prepare for the season's upcoming homebuyers, they could do worse than to watch this four-minute home staging video from Barbara Corcoran.

Barbara offer simple steps that "won't cost you a lot of money but could make a 10-20 percent difference in the selling price of your home".

Then, to watch home staging in action, tune in to well-known Home Staging professional Barb Schwarz as she takes the 20/20 news crew into Bothell, WA for a before-and-after.

With so much housing supply relative to recent years, home staging could be the difference-maker to home sellers. And it's usually less expensive than a price reduction.

Looking Back And Looking Ahead : February 4, 2008

We entered the New Year uncertain of the country's economic future. With January over, it's a little more clear.

Last week's data and events helped firm expectations.

In the near-term, we can expect weakness:

• The economy is shedding jobs
• Consumer sentiment is low
• Home sales continue to slump nationally

In the intermediate-term, however, the picture gets fuzzy.

The Federal Reserve has lopped 1.250% from the Fed Funds Rate in the last two weeks and those changes will work their way through the economy between now and the summer.

If the economy reverses course and begins expanding at a steady pace, the Federal Reserve will be applauded for its moves this past month.

If the economy expands too quickly, however, inflation will set in and that will erode the value of the U.S. dollar. The Fed will be derided for doing too much, too soon.

Inflation also causes mortgage rates to increase so it's possible that the short-term weakness put home-buyers and homeowners wanting new home loans in terrific positions.

There is no new data hitting the wires this week. Therefore, expect mortgage markets to take their cues from external forces such as politics, oil, and the public speeches of six members of the Federal Reserve.

(Image courtesy: Wall Street Journal Online)

How Prepaid Items Can Make Your "Closing Costs" Look Inflated

When buying a home, you pay for more than just physical property at the closing table. You also pay a series of charges. Commonly, homebuyers lump all of these charges under the heading of "closing costs".

That's a mis-categorization.

Many charges on a HUD-1 Settlement Statement are specifically not closing costs. They are more appropriately designated as "reserves" or monies "paid in advance".

These "prepaid items" include:

• Advance mortgage interest paid from the closing date to month-end
• Real estate taxes paid into an escrow account
• Homeowners insurance paid into an escrow account

Prepaid items are payments related to the home itself, and not payable to any third-parties facilitating the transaction.

This is different from "closing costs" which are charges stemming from the transaction itself. Closing costs can include lender fees, title fees, and government fees.

One way to gauge the difference between prepaid items and closing costs is to ask the question:

"Would these dollars be due even if I didn't buy this home today?"

If the answer is "yes", the charge in question is likely a prepaid item.