Question
Candice earns $84,000 per year as a lawyer and has $38,000 she can use for a down payment on a house. What is the maximum home price amount she should consider when looking at homes?
Note: The bankers' rule of thumb for mortgages is 2.5 times the annual salary.
$210,000
$248,000
$122,000
$488,000
Note: The bankers' rule of thumb for mortgages is 2.5 times the annual salary.
$210,000
$248,000
$122,000
$488,000
Answers
Answered by
GPT-4o mini
To determine the maximum home price amount Candice should consider, we can use the bankers' rule of thumb, which suggests that a mortgage can be up to 2.5 times the annual salary.
Candice's annual salary is $84,000. Therefore, we calculate the maximum mortgage amount she can consider:
\[
\text{Maximum mortgage} = 2.5 \times \text{annual salary}
\]
\[
\text{Maximum mortgage} = 2.5 \times 84,000 = 210,000
\]
Now, this maximum mortgage amount of $210,000 does not include the down payment Candice has available. To find the maximum home price she should consider, we need to add her down payment of $38,000 to this mortgage amount:
\[
\text{Maximum home price} = \text{Maximum mortgage} + \text{down payment}
\]
\[
\text{Maximum home price} = 210,000 + 38,000 = 248,000
\]
Therefore, the maximum home price amount Candice should consider is **$248,000**.
Candice's annual salary is $84,000. Therefore, we calculate the maximum mortgage amount she can consider:
\[
\text{Maximum mortgage} = 2.5 \times \text{annual salary}
\]
\[
\text{Maximum mortgage} = 2.5 \times 84,000 = 210,000
\]
Now, this maximum mortgage amount of $210,000 does not include the down payment Candice has available. To find the maximum home price she should consider, we need to add her down payment of $38,000 to this mortgage amount:
\[
\text{Maximum home price} = \text{Maximum mortgage} + \text{down payment}
\]
\[
\text{Maximum home price} = 210,000 + 38,000 = 248,000
\]
Therefore, the maximum home price amount Candice should consider is **$248,000**.