Unit 1: Do You Want to Buy a Home?

Lesson 4: Savings accounts

Usually when you buy a home, you must pay at least 5 percent of the price immediately. This is called the down payment. (However, you may be able to get a mortgage loan
with only a 3 percent down payment.) You will need some extra money too for closing costs. Closing costs will include payments for taxes, insurance, the attorney fees, and other expenses. You pay the closing costs only once, when you sign all of the papers for your new home. You must show that you have enough money in a bank account for the down payment and closing costs. The lender likes to see that you have been saving money.

Example: $40,000 (house price) x .05 = $2,000 (down payment)

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Andre’s savings account

Andre Moreau does not like banks and does not have a checking account or a savings account. He always cashes his paycheck and keeps the money under his bed. Andre’s wife says that it is better to put the money into a bank. She says that they need to save to buy a house someday.

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