As 2019 winds down, you might be thinking about your living situation for 2020 (especially if your lease winds down sooner than later). If you’re a New Year’s resolution type, you might even be thinking about major life changes you can make not just for the next year, but for the start of a new decade. One such shift might be switching from renting to owning, but the transition can be especially confusing for first-timers. With enough planning now, you can avoid unnecessary troubles. Here’s how to prepare to buy an apartment in 2020.
Look at your budget
Buying an apartment is a huge financial decision, so you’d better be prepared to put the money down. Take the time now to organize your budget for 2020 and determine how much you can afford to spend on not just the total price, but how much you can put down toward a down payment and monthly mortgage payments (and maintenance and HOA fees, if applicable).
Thoroughly knowing your finances can also make landing a favorable mortgage rate way easier. Account for all your assets, income, and expenditures across all categories. Find ways to cut back on spending and increase your income, but do so carefully – changing industries or switching from salary-based to commission-based income can make lenders less willing to offer you a mortgage.
Get your down payment ready
If you haven’t started saving toward your down payment, you need to start as soon as possible. Buyers typically spend approximately 5 to 20 percent on the down payment. Many real estate experts discourage the lower payments, as they can actually lead you to spend more money on mortgage payments in the long run.
Increase your credit score
Many Americans can stand to improve their credit scores even if it’s already good. Take the time now to pay any outstanding debts, and commit to paying all your bills well ahead of their due date starting in 2020. This tactic is especially important with credit cards, as the later you pay off any debts you’ve accumulated on your credit cards, the more quickly your credit score declines (plus, nobody likes paying those pesky credit card interest fees). And even if you don’t need any new credit accounts, don’t close the ones that you have (unless closing unused accounts means you won’t pay fees).
Get your paperwork together
Applying to purchase an apartment can often involve stacks of paperwork. You can get ahead of the curve by preparing your paperwork now. You’ll want to gather two months of statements for your credit cards, bank accounts, and investment accounts, two years of federal and state tax returns, and proof of income. You should also create a monthly debt schedule that details all your monthly payments, including but not limited to utility bills, insurance premiums, student loans and more. For an exhaustive list of all the paperwork you should gather as you prepare to buy an apartment in 2020, head here.
How else would you consider preparing for buying an apartment in 2020? Sound off in the comments!