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» Stocks cool, interest rates rise - where is real e
The Fed's chief weapon against inflation is interest rates. By raising the Prime Rate, the Fed makes borrowing money more expensive. The result is that businesses can't fund expansion as easily as when interest rates are lower, so they grow more slowly or don't grow at all. That means fewer new jobs. Consumers pay more on credit card debt and variable rate mortgages. Prices remain stable, but the economy slows, corporate earnings shrink, and stocks drop in value. The natural course of things is that real estate prices also settle down.
This does not necessarily mean that your real estate investment is going to lose value, but it might mean that the rates of return you have come to expect may be less. When requesting a hard money loan, be conservative about the value and potential value of your real estate collateral. We may not like this reality, but it's best to deal with it realistically. Conservative calculations on your part now will bring happy results in the future.
