SUBORDINATOR EXERCISE #2 
 
1.  Buying a home can be a financially risky venture unless you know what you are doing. 
 
2. First, it is important to learn as much as you can about homeownership, mortgages and lending 
practices in your area, the housing market, and neighborhoods. 
 
3. Since most people cannot afford a home outright, many people rely on mortgages for purchasing 
homes. 
 
4. A mortgage is a loan provided by a bank or a mortgage lender for the express purpose of buying a 
home. 
 
5.  Like any loan, a mortgage is provided to a person with the idea that a person will pay back the money 
to the bank with interest (i.e., money you pay in order to borrow money from the bank or lender). 
 
6. Before approaching a bank or lender, a person should research the lending practices of the area to see 
if the state, county, or region offers special programs for people buying a home for the first time. 
 
7. If an area offers a first-time homeowner program, you might benefit from this program, whether that 
program helps you with a down-payment or even offers a lower interest rate for a home loan.  
 
8.  To clarify, a down-payment is the sum or amount of money you intend to place on the home before the 
mortgage is added. 
 
9.  For example, if you are going to buy a home for $200,000.00, then you might put down 25% of that 
amount (or $50,000.00) before the bank applies the loan to the purchase of the home. 
 
10.  Second, once you have determined the amount you can apply to a down-payment and approached a 
bank about a mortgage, you need to find a home. 
 
11. Whenever you are looking for a place to live, remember the most important thing: Location, location, 
and location.   
 
12. In other words, the location or neighborhood where you live is one of the most important aspects of 
buying a home, since where you live will be pivotal to 90% of your happiness and 90% of your misery. 
 
13.  You do not want to be stuck living next to a difficult neighbor or live in a neighborhood with high 
crime, unless you really want such living conditions.  
 
14. Once you have found a home, you need to discuss your intentions with the seller of the home and 
make an offer.   
 
15. Although the process of obtaining a mortgage and finding the home may seem very quick, the 
process of making an offer and closing the deal may take months, so be prepared.   
 
16. Make sure you do as much research as you can before even thinking about obtaining the mortgage 
and making an offer, since you do not want to end up with a bad mortgage or, even worse, a bad home.