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2.4 Budgeting

2.4 Budgeting
  • Math Help

    The math symbol ≤ is read as "less than or equal to." This means that the inequality

    is read as "The ratio of your mortgage to your gross monthly income should be less than or equal to 28%."

    If you check on the Internet, you will see that many financial advisers regard the 28/36 Rule as being too risky. More conservative rules are in the neighborhood of 20/28, rather than 28/36.

  • Consumer Suggestion

    If you plan on buying a home in the near future you may want to check out Housing Predictor to see a list of the best and worst housing markets in the United States.

  • Checkpoint Solution

    Your gross annual income is $73,000, which means that your gross monthly income is

    Your monthly mortgage would be $1950. So, the ratio of your mortgage to your monthly income is

    At this point, you have failed the 28/36 Rule because this ratio is greater than 28%. Just for the sake of curiosity, you can check the ratio of your mortgage plus your other monthly debts.

    So, by the 28/36 Rule, you also fail to qualify for the mortgage.

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