Alysha's monthly income is $1,500. She is currently renting an apartment for $750 a month. She wants to buy a house. The mortgage would be $1,350 a month.

Question

Alysha's monthly income is $1,500. She is currently renting an apartment for $750 a month. She wants to buy a house. The mortgage would be $1,350 a month.

Analyze her decision and state why such a financial decision is responsible or irresponsible. (1 point)
Alysha's decision is irresponsible.
• Her home may depreciate in value after she buys it.
Alysha's decision is responsible.
Owning a home will stabilize her finances when she no longer has to pay rent.
Alysha's decision is irresponsible.
• She should only buy a home if she can pay cash for it.
Alysha's decision is irresponsible.
• With a mortgage payment taking up 90% of her income, she will likely have difficulty making payments.

Answer 1

Alysha's decision is irresponsible. With a mortgage payment taking up 90% of her income, she will likely have difficulty making payments. This can lead to financial stress and potentially even foreclosure if she is unable to keep up with the mortgage payments. It is generally recommended to have a mortgage payment that is around 30% or less of one's monthly income to ensure financial stability. Considering Alysha's current income and expenses, it would be more responsible for her to find a more affordable housing option or continue renting until she can improve her financial situation.