If you are saving for a home, moving into a rental apartment makes sense. After all, your living-related expenses are typically lower than if you stayed in a home. Unfortunately, if you make financial mistakes while living in the apartment, your dreams of saving a down payment for a home could be dashed. To help you stay on track, here are some pitfalls that could lead to savings difficulties.
Failing to Read Your Lease
Chances are, your lease is four or five pages of legal jargon that seems boring to read. However, it is important that you take the time to read the lease before signing the document. Once it is signed, it is a legally binding document that could have a long-term impact on your finances.
Even if the landlord reviews the lease with you, read it yourself. Reading the document helps you to understand which situations could lead to you losing your deposit. It also can help you understand whether or not there are hidden costs that you should factor into your monthly rent.
Skipping Renter's Insurance
One of the biggest mistakes that renters make is saying no to renter's insurance. Some renters mistakenly believe that they are protected by the landlord's insurance if a disaster occurs. However, all of your damages might not be covered by your landlord's insurance and you could be left paying out-of-pocket to replace or repair your belongings.
For instance, if the water heater in your apartment floods, your landlord's insurance might only cover the damage to the flooring, wall, and other structural components of the apartment. If you have renter's insurance, you can file a claim to help cover the cost of damage to your personal belongings, including your furniture and clothing that was damaged.
Staying Beyond Your Lease
Your lease could include a clause that could end up costing you money after you move out of the apartment. If you fail to move out by the lease-end date, your landlord could choose to charge you a fee for overstaying.
In some instances, the lease allows the landlord to charge for part or all of the rent for a tenant who waited to move out past the lease-end date. If you are planning to move, make sure you are out on time.
Before signing your lease, talk to your real estate agent about other missteps that could lead to you paying out more than expected for your apartment life.