Don’t Be Blindsided by Closing Costs!
Make Sure You Are Aware of All the Costs and Fees That Go Into Buying a Home
When buying a home, it can be tough to look past the daunting down payment ahead of you. The last thing you need is to be blindsided by a cost or fee of which you aren’t aware. In New Mexico, it is a good rule of thumb to expect to pay at least 2% to 3% of the home’s sale price in closing costs. To estimate your closing costs, take the home’s projected sale price and multiply it by 3% (or 0.03). For example, a $500,000 sale price x 0.03 = $15,000 in closing costs, not including your down payment. The table below shows the average and expected closing cost ranges for houses in New Mexico priced between $200,000 and $300,000.
|Average Home Sale Price||$238,227 to $338,227|
|Average Total Closing Cost||$7,205.68|
|Expected Closing Cost Range||$4,764.54 to $10,146.81|
|Percentage of Closing Cost to Sale Price||2% to 3%|
WHO PAYS WHAT?
You may be able to negotiate for the seller to take on some of the closing costs that the buyer usually pays. However, it is good to understand what fees and costs you will more than likely be expected to pay. These costs and fees can start to add up, but you can look at them as part of the investment and protection of your soon-to-be new home. And remember, living in New Mexico means no transfer tax when transferring the home’s title. The table below shows who usually pays what for closing costs in New Mexico.1
|Cost or Fee||Who Pays|
|Title Search and Insurance||Buyer|
|Loan Application Fee||Buyer|
|Loan Origination Fee||Buyer|
|Building or HOA Fees||Buyer|
|Taxes/Insurance in Advance||Buyer|
|Recording Fees||Buyer or Seller|
|Settlement Fee||Buyer or Seller|
|Real Estate Brokerage Commissions||Seller|
|Mortgage Payoff Penalty||Seller|
PRIVATE MORTGAGE INSURANCE (PMI)
PMI is a monthly cost that can be avoided if you are able to make a down payment of at least 20%. Unfortunately, this is not always an option. Lenders will charge PMI if there is not a sufficient down payment to protect the financial institution in the event of default on the loan. PMI is calculated by looking at your downpayment, interest rate, and credit score. Fortunately, SLFCU does not require PMI which in return can save you hundreds of dollars every month
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