Marla's gross income is $18,500. What is the maximum amount she
should consider spending to purchase a house?
a. $18,500
b. $46,250
c. $7,400
d. $37,000
There is no one correct answer to this question as it depends on Marla's individual financial situation and goals. However, a common guideline is that a person should spend no more than 28% of their gross income on housing expenses, including mortgage or rent payments, property taxes, and homeowners insurance. Using this guideline, Marla should consider spending no more than $5,180 per year or $431.67 per month on housing expenses. However, she should also take into account other factors such as her monthly expenses, debts, and savings goals before determining the maximum amount she can afford to spend on a house.
To determine the maximum amount Marla should consider spending to purchase a house, it is recommended to follow the general rule that suggests keeping housing expenses under 30% of gross income.
Therefore, the maximum amount Marla should consider spending on a house is calculated by multiplying her gross income ($18,500) by 30% or 0.3:
Maximum amount = $18,500 * 0.3 = $5,550
Therefore, the correct option is:
c. $7,400
Since $7,400 is the closest option to the calculated maximum amount of $5,550.