interest rates and real estate - should I invest?

I'm a real estate investor. Many of my skeptical friends have mentioned that real estate prices will pop like a bubble when interest rate rise. To me, whether interest rates pop the real estate bubbles out there isn't the key question. The key question is whether interest rates will indeed rise - to levels of years past to 8+ % or even to the outlandish 15+ % from the Carter years, and be at such high levels that they force the popping of the real estate bubble.

One camp says "no" --- interest rates will stay low for the foreseeable future. Why? The "Rubonomics" of the Clinton era - an era that saw low interest rates fuel the vibrant economy - proved that low interest rates are an indispensibable tool for the buoyant economy. The government would be foolish to prevent liquidity in the market by raising interest rates to such high rates ever again.

Another camp says "rubbish." The lack of fiscal discipline from the George W Bush years with decreasing taxes proves that the government maybe willing to use interest rates, instead of taxes, as a way of tame inflation when necessary.

What do I think? I think that the feds (Greenspan et al.) have left the impression that interest rates should be kept historically low for a vibrant economy, and therefore, they will be kept historically low for the next generation (~ 20 years).

What does this mean for you? Well - for one, interest rates will not pop that real estate bubble. And two - if you're thinking about buying real estate (whether as a primary or investment grade property) - its a great investment.

To learn more about mortgages, interest rates and real estate, go to sites like these:http://www.ussavingsnetwork.com/ . Good luck with your real estate mortgages and purchases. - MrJ.

About Interest Rates...

About Interest Rates

Research RatesBegin by checking out current interest rates and rate movements when shopping for a mortgage. Mortgage rates generally rise and fall along with Wall Street securities and generally reflect the overall direction of interest rates. By keeping an eye on mortgage market trends and key economic indicators, a borrower has a better chance of obtaining interest rate savings.

What is APR?

A tool used to compare loans across different lenders is the Annual Percentage Rate (APR). The Federal Truth in Lending law requires mortgage companies to disclose the APR when they advertise a rate. It is designed to represent the true cost of the loan to the borrower, expressed in the form of a yearly rate. The purpose is to prevent lenders from hiding fees and upfront costs behind low advertised interest rates.

Meeting with a LenderYou may prefer to meet with the mortgage company before house hunting to determine in advance how much you can afford and the mortgage amount for which you can qualify. This step is called pre-qualification and can save you time and trouble by making certain you are looking in the correct price range.

Lock in Your Rate

A lock in, also called a rate lock or rate commitment, is a lender's promise to hold a certain interest rate and a certain number of points for you, usually for a specified period of time, while your loan application is processed. Depending upon the lender, you may be able to lock in the interest rate and number of points that you will be charged when you file your application, during processing of the loan, when the loan is approved, or later.

See: http://www.ussavingsnetwork.com for more info