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

Related Articles
  1. Personal Finance

    Watch Out for "Junk" Mortgage Fees

    So many fees are tacked onto a mortgage, that it's easy to pay more than you have to.
  2. Personal Finance

    How to Lower Refinance Closing Costs

    Refinancing a mortgage can save you money but it isn't free. There are closing costs associated with a refinance and how much you pay for them depends on you.
  3. IPF - Mortgage

    11 Mistakes First-Time Homebuyers Should Avoid

    Many first-time homebuyers make missteps in the mortgage and home-buying processes. Here are some of the most common mistakes to avoid.
  4. Personal Finance

    How to Find the Best Refinance Companies

    From traditional lenders to online loans, here's everything you need to know about refinancing your mortgage.
  5. Investing

    The Pros and Cons of Owner Financing

    Details on the upside and risks of this type of deal for both the owner and the buyer.
  6. Personal Finance

    How Many Mortgage Lenders Should You Apply to?

    Applying to multiple mortgage lenders can get you a better deal, but it comes with a few drawbacks.
  7. Investing

    13 steps to closing a real estate deal

    A long list of things needs to happen before a home becomes yours. Find out what to expect when closing a real estate deal.
  8. IPF - Mortgage

    How to Get the Best Mortgage Rate

    A crucial consideration as you shop mortgages is getting the best possible interest rate.
  9. Investing

    Playing hardball when selling your home

    Are you planning on selling your house? Learn these strategies to help you get you a better deal in house sale.
  10. Personal Finance

    Why Mortgage Applications Just Dropped 12%

    Mortgage applications took a steep dive at the end of 2016. Is a housing slowdown coming?
Frequently Asked Questions
  1. How Do Gross Profit and Gross Margin Differ?

    Both gross profit and gross margin measure how profitable a company is for a given period, but show profitability in different ...
  2. Why can you short sell an ETF but not an index fund?

    Because you purchase and redeem mutual fund units from the mutual fund company and (generally) not on the open market, you ...
  3. How do I use Moving Average (MA) to create a forex trading strategy?

    Learn a simple forex trading that uses multiple moving averages and is designed to create low-risk, high-reward trading opportunities.
  4. What is the difference between derivatives and swaps?

    Swaps comprise just one type of the broader asset class called derivatives.
Trading Center