Which of the following would increase the amount that a person could afford to spend on a home?
a)increased family income
b)increased interest rates
c)decreased down payment
d)high montly living expenses
IS A CORRECT ANSWER?THANK YOU:))))
Yes. A is the only answer.
Yes, you are correct! Increased family income would indeed increase the amount that a person could afford to spend on a home. When a person's income increases, they have a larger budget to allocate towards various expenses, including their home. This means they can afford a higher purchase price or monthly mortgage payment.
To arrive at this answer, one can analyze the impact of each option:
a) Increased family income - This option directly leads to more available funds and provides the person with greater financial capacity to spend on a home.
b) Increased interest rates - Higher interest rates actually have the opposite effect. When interest rates increase, the cost of borrowing money for a mortgage increases, limiting the amount a person can afford to spend on a home.
c) Decreased down payment - A decreased down payment means that the person is putting less money upfront, which can increase the amount they can borrow for a mortgage. However, this typically leads to higher monthly payments and possibly the requirement of private mortgage insurance (PMI).
d) High monthly living expenses - High monthly living expenses consume a significant portion of one's income, leaving less money available to allocate towards a mortgage payment. Therefore, this option would decrease the amount a person can afford to spend on a home.
In conclusion, option a) increased family income is the correct answer in this scenario.