Before purchasing a home in New Mexico, buyers should be aware of the closing costs that are required as part of the transaction. Closing costs are various fees paid at a real estate closing. Because real estate transactions involve several entities beyond just the buyer and seller, each of these entities must be paid for their time and services. In New Mexico, the majority of closing costs get paid to the mortgage lender. Cash buyers are not responsible for these costs. The remaining charges come from appraisers, attorneys, credit bureaus, flood certifications, home inspectors, couriers and survey companies.

Average Closing Costs in New Mexico

For the year 2015, average closing costs in New Mexico equaled about 1% of the purchase price. A buyer purchasing a $200,000 home, then, should expect closing costs of $2,000. In 2015, the national average closing costs for a $200,000 home were $1,850, which was a drop from $2,000 in 2014.

Sometimes lenders advertise mortgages with zero closing costs. Buyers should be aware of what a zero closing cost mortgage actually entails. It does not mean the buyer saves $2,000. It simply means that buyers pay it a different way; specifically, with a higher interest rate on their mortgage. A mortgage company can increase the yield spread over par to cover closing costs. This makes it appear as a free loan, even though the borrower actually pays more over time.

As a general rule, a zero closing cost mortgage makes sense only for buyers who plan to sell or refinance after a very short time. Otherwise, the higher interest charges end up costing more over time than the closing costs.

What Goes Into New Mexico's Closing Costs

On average in New Mexico, more than 50% of closing costs accrue to the lender. The majority comes from the origination fee. This fee is how a lender makes money for its services. It is expressed as a percentage of the total loan amount, such as 0.5%. For a $160,000 loan amount, a standard origination fee is $800. A lender might also charge small fees, usually under $100 each, for document preparation and tax services.

For a $200,000 home purchase, a New Mexico buyer should expect lender closing costs between $900 and $1,200. If the buyer's down payment is higher than the standard 20%, then these costs should be lower.

The remaining closing costs get paid to a host of other entities. The following fees represent the most common non-lender closing costs. Depending on the details of the transaction, a buyer might be required to pay some or all of these fees.

The closing or settlement fee, which is typically the largest non-lender closing cost, goes to the settlement agent. The settlement agent, who is usually an attorney or title company representative, is responsible for executing the transaction and transferring the title from seller to buyer. On average, this fee is $500 in New Mexico.

The next-largest fees are the survey fee, if applicable, and the appraisal fee. The survey fee pays for a professional to survey the property and determine exact property line boundaries. Not all lenders require a property survey, nor do all buyers get one. Its cost in New Mexico is typically $450. A home appraisal, which nearly every lender requires, can run anywhere from $300 to $600.

Most lenders also require a home inspection, which checks for, among other things, structural integrity and the presence of pests, such as termites. An inspection costs $100 to $200 on average. Depending on the home's location, a flood certification, usually obtainable for under $50, may also be required.

Lastly, a courier or postage fee, usually around $100, may apply. The charge of obtaining a credit report, which is usually required for a mortgage, costs approximately $20 from each of the three major bureaus.

A buyer may be responsible for some or all of the above non-lender fees. The average total for non-lender fees in New Mexico ranges from $800 to $1,000 for a $200,000 home purchase. All lenders are required by law to provide borrowers with a good faith estimate (GFE) before executing a mortgage agreement. That document provides a best estimate of both lender and non-lender closing costs.

Oregon (OR): Average Closing Costs

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