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5 Money Musts Before You Fill Out That Rental Application

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Rent responsibility: Make sure your finances are in order before committing to a new place.

Finding an apartment that fulfills all the requirements on your list can be as challenging as finding a needle in a haystack — especially in cities where inventory is low and demand is high.

But once you finally find that elusive dream apartment for rent in New York, NY, and start squealing in excitement, take a breath. Don’t submit your rental application before ensuring all of your financial ducks are in a row. Doing so can lead to a host of financial hardships down the road, if you’re even able to qualify in the first place.

Make sure you tackle these five money tasks before you say, “I’ll take it!”

1. Know what your budget can really handle

Pouring the majority of your income into housing might seem doable at first, but this is one surefire way to strain the rest of your financial obligations and stop progress on your other financial goals (such as paying off your car or saving for a down payment on a home).

One commonly used rule of thumb is to keep housing costs at or below 30% of your net income. Another way to determine affordability is to add up the monthly income of all paying members of the household (if you plan on having roommates), ensuring the total is at least three times the monthly rent.

Keep in mind, however, these rules of thumb don’t always fit everyone’s financial picture. If you have astronomical student loan payments, or if you’re working to get out from under consumer debt, you’ll need to take those additional financial obligations into consideration.

2. Check the health of your credit

Do you know if your credit report has black marks that could keep you from being the best rental candidate? Do you know what your credit score is?

Instead of handing over your application and crossing your fingers that nothing too damning will show up when the leasing office completes tenant screening, do your own research ahead of time — preferably before you have your heart set on a specific apartment. This will allow you to determine whether all information being reported is accurate and dispute specific items if they’re not.

You can receive one free credit report yearly from each of the three credit-reporting agencies: Experian, TransUnion, and Equifax. You can also check to see if your credit card company is now offering free access to your credit score.

3. Make sure you can cover all upfront costs

While some larger apartment complexes require only a small deposit, other rental options might require thousands in upfront move-in costs. These initial payment differences can be the dividing line between a place you can afford and one you can’t.

Understand what you will need to cover before move-in, ensuring you won’t be draining your emergency fund in the process. This could include application fees, security deposits, pet deposits, first and last month’s rent, renter’s insurance — just to name a few. In addition, make sure to factor in your personal moving costs such as truck rental or fees paid to a moving company.

4. Read the fine print about lease termination

Sometimes life circumstances can change in an instant, requiring living situations to change along with them.

Even if you have no intention of moving out at any point during the span of your lease, it’s always important to be fully informed of the consequences should things change.

Before signing your lease agreement, see what the stated penalty is for early lease termination. Some landlords charge one month’s rent, while others could require the remainder of the lease to be paid in full. Also, check to see if you are allowed to sublet the apartment, absolving you from paying any early termination fees. It’s always better to be informed now than shocked later on.

5. Have roommates? Consider drafting an agreement

Maybe Sheldon Cooper is on to something. While you and your roommate(s) could have a fantastic relationship now, things can go south when you throw money into the mix (or, you know, one of you becomes a zombie).

To protect yourself should this particular living situation go awry, or if a roommate is no longer able to cover their share of the housing expenses, consider drafting a roommate agreement beforehand. Include what portion of the deposit, rent, and utilities each person will be required to pay, along with house rules, restrictions, and anything else you believe should be outlined.

Now that your financial bases are covered, shoot for that killer rental, knowing your preparation has made you a top candidate. And on move-in day, you can breathe easy knowing you won’t face anything unexpected.