Fannie Mae Foundation: How to Buy a Home

Vocabulary
attorney
down payment
sales price
closing costs
fees

Purpose
To understand the importance of savings accounts.

Warm-up
Discuss the advantages of saving money in a savings account. Write some of these ideas on the board. Talk about saving for long-term financial goals. Discuss the reasons that a mortgage lender would like the borrower to have a savings account.

Pre-reading activity
1. Ask learners to read the titles. Ask them where people usually save money. Ask them where Andre has his savings account.

2. Have learners read the paragraphs and circle any new vocabulary. Explain the difficult vocabulary before having learners answer the comprehension questions.

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)

House Price	5% Down Payment
$100,000	$5,000
$80,000	$4,000
$50,000	$2,500
$40,000	$2,000

Need help? Use the calculator!

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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