Is it better to rent or buy a house when you’re in your 20s?

This is an interesting question that never gets old. Right now, it is more important as young professionals are embracing the American dream. Let me tell you a personal story:

While in his 20’s, my uncle bought a house in Monroe Michigan for $26,000. 50 years later, today, the house is worth $70,000.

While it may seem like a massive appreciation of over 250%, there are vital things to consider. First, 50 years is a lot of time. Second, by the time you pay for upkeeps and upgrades, this house investment has very little profit.

Was he better off renting this house for 500 bucks a month? Probably. More importantly, he missed out on other investment opportunities that he might have had.

While my uncle could afford the house in Monroe Michigan, it would be hard to buy a house in areas like NYC or San Francisco in your 20’s, where mortgage payment is almost 1.5X the rent. Good investment properties are at .8x the rent, so you have a positive cash flow.

When evaluating the critical choice of buy vs rent, there are certain things you must consider in your 20’s. First, check the rent-mortgage ratio. Zillow often put up rent amount vs mortgage payment. Although, you can calculate the ratio yourself. For instance, if the rent is $1000 and the mortgage is $1500 renting becomes a better option. However, if the rent is $1000 and the mortgage is $900, buying is the right thing to do.

Apart from the rent-mortgage ratio, you may want to consider your career and schooling plans. For instance, if you plan to go back to school, buying a house may not be the right option. There are a few exceptions though. If you are sure you are going to stay in the house during the schooling program and can afford the mortgage along with the expenses, buying may be a viable option.

In the end, like a lot of real estate decisions, it always boils down to Location, Location, Location.

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This question was initially answered in Quora by our co-founder and mortgage ninja Kevin. View in Quora

Why does buying a house bring down your credit score?

Buying a house may affect your credit score if you are not doing your mortgage shopping the right way.

The usual process for obtaining a loan is not always the best approach. For instance, when a borrower wants to buy a house they get pre-qualified with perhaps their own bank. The bank offers them an X rate, and the borrower starts to think, “I wonder if I can get a lower rate.”

Then, they check Google for mortgage rates. Most often, Google directs them to lead generation sites (the so-called comparison sites). These companies have their own unique methods of sucking in the borrower. For example, LendingTree will use low “Bait” rates to trick the potential borrower into thinking they can do better than they really can.

Zillow promises home price maps which they use in capturing your info. Bank rate or Nerdwallet will pull you in through unrelated articles they might have published.

Ultimately, they want the same thing. They want the personal and contact info of borrowers so they can sell them as Leads to loan officers.

This is where the borrower’s nightmare typically begins. They talk to one Loan officer at a lender and the LO asks to pull the borrower’s credit to verify the credit scores. But what the LO is actually doing by pulling credit is holding the borrowers best FICO. As the borrower move on to shop with another LO he also will do a similar credit pull.

If the borrower slips and allows their credit to be pulled multiple times, the first LO who pulled their credit will be holding the highest FICO score as the borrower’s credit starts to go down due to multiple credit pulls.

The first LO is at an advantage by holding the best possible score of the borrower and able to offer the best pricing compared to all the other offers. Even though this dirty trick is not discussed in widespread, it is still in practice and must be watched out.

Essentially there is no practical way to shop 400 thousand loan officers that offer different pricing using any of the existing comparison sites which are actually in the business of selling your personal info as a lead.

That is why created Parlend. Parlend’s patent-pending fair mortgage calculator calculates the best rate you can qualify for your loan and then shops that rate for you with thousands of loan officers and find the loan officer who is willing to offer you that rate instantly and anonymously

Check out our free mortgage shopping tools at

This question was initially answered in Quora by our co-founder and mortgage ninja Kevin. View in Quora

What credits can I ask mortgage lenders when I get them to compete against each other?

If Lenders compete, your job would be very easy; but, they do not compete with each other. Instead, they hire Loan Officers (LO) who are put on the different commissions. In turn, these Loan Officers (LO) offer different pricing that suits their commission plans.

This explains why you may get a quote when you contact a lender, but it does not mean the lender is offering you that. That lender could have thousands of LO’s who offer slightly different pricing. Examples of Lenders include Wells Fargo, Chase, and Quicken.

Now let’s get to your question. To know what credits you can ask lenders, you have to understand what the lowest rate your risk profile can even qualify for. This is known as the PAR pricing. In other words, PAR is your fair pricing, and you deserve it.

Once you know your PAR pricing, you also need to know the closing cost associated with it. This helps you to figure out how much money is needed. To make closing cost simple, you should always ask for a ZERO-point closing cost. With zero-point closing cost, the lender will front many of the initial closing costs and fees, while charging a slightly higher interest rate over the duration of the loan.

This will even out the playing field and you can focus on the rate by itself. Read more about closing cost here

Check out our free mortgage shopping tools at

This question was initially answered in Quora by our co-founder and mortgage ninja Kevin. View in Quora