Multiple Choice: For each of the given family incomes, find the maximum amount the family should be able to spend on a house. Family income: $61,575
a)$163,936.50 b)$153,836.50
c)$153,937.50
Family income: $54,800
a)$138,500 b)$137,000
c)$138,000
What formula are you supposed to use? Many years ago the guide was to spend 2 1/2 times your yearly income on a house. Has that changed?
the formula said 23%
I think that formula is monthly house payment, being .23 of the monthly income.
So what interest rate really is the question, that determines the monthly payment.
Assuming a 30 yr loan term, with 5 percent interest, an a yearly payment of .23*61575, then (payment amount is 14,162) the loan amount would be a maximum of 217,550; however, at an interest rate of 8 percent, 159,466 could be the loan amount.
That is with one payment a year.
Play with this calculator. Leave the loan amount blank, it will figure if for you. http://www.bretwhissel.net/cgi-bin/amortize
Family income $61,575
To find the maximum amount a family should be able to spend on a house, we need to determine the appropriate percentage of their income they can allocate towards housing expenses. This is generally known as the debt-to-income ratio.
The debt-to-income ratio measures the percentage of a person's income that goes towards paying off their debt obligations, including housing expenses. The commonly recommended debt-to-income ratio for housing is 28%.
To calculate the maximum amount a family can spend on a house, we can use the following formula:
Maximum housing expense = Family income * Debt-to-income ratio
Now, let's calculate the maximum amount each family can spend on a house:
1. Family income: $61,575
Debt-to-income ratio = 28%
Maximum housing expense = $61,575 * 0.28 = $17,245.40
Therefore, the maximum amount this family should be able to spend on a house is $17,245.40.
2. Family income: $54,800
Debt-to-income ratio = 28%
Maximum housing expense = $54,800 * 0.28 = $15,344
Therefore, the maximum amount this family should be able to spend on a house is $15,344.
Given the multiple-choice options, none of the provided answers matches the calculated maximum housing expenses for each family. It seems there might be an error in the answer choices.