How Much are Closing Costs in New Mexico?

When buying a home in New Mexico, it’s important to plan for closing costs, which can be a substantial part of the final price tag. These costs, covering everything from lender fees to title insurance, can add up quickly. To avoid any financial surprises, it’s best to hold off on making big purchases until after you’ve closed and received the keys to your new home. Knowing what to expect can help you manage your budget and finish your homebuying journey smoothly. Let’s break down how much closing costs are in New Mexico, who pays for them, and what costs you can expect to pay as a buyer and as a seller.

How much are closing costs in New Mexico?

In addition to the down payment, homebuyers will also need to pay closing costs before securing the keys to their new home. Closing costs in New Mexico typically range from 2%-5% of the home’s purchase price. However, keep in mind that closing cost amounts vary depending on a number of factors – such as the buyer’s loan program or negotiations made with the seller.

Let’s say you’re buying a home in Santa Fe, where the median home sale price is $500,000. Based on this, you could expect closing costs to be between $10,000 and $25,000. Whereas if you?re buying a home in Albuquerque, which has a median sale price of $350,000, closing costs could be anywhere from $7,000 to $17,500.

Who pays closing costs in New Mexico?

In most areas, including New Mexico, both the buyer and the seller will pay closing costs. But the buyer and seller will pay for different closing costs and likely have different total closing cost amounts. Keep in mind that it’s common for the buyer to pay closing costs out of pocket, while the seller’s closing costs are deducted from the home sale proceeds.

Buyer closing costs in New Mexico

Closing costs in New Mexico for homebuyers usually range from 2%-5%. In most cases, you’ll pay earnest money, typically 1% to 3% of the home price, upon reaching mutual acceptance in your home purchase. This deposit is subtracted from your closing costs, reducing the total amount due at closing. Here are a few common closing costs that buyers typically cover:

• Appraisal fee: Home appraisals, which typically range from $300 to $500, are usually paid for separately at the time of the service. However, if not, you’ll need to pay for this at closing.
  
• Inspection fee: Although not required, a home inspection is highly recommended. Home inspections generally range from $300 to $500 in cost and are usually paid at the time of service. However, if not, it will need to be paid at closing.
  
• Loan origination fee: Your lender may charge a fee for creating your loan. It’s important to inquire about what this cost covers and whether it’s negotiable to potentially avoid high costs.
  
• Loan processing fee: Lenders may also charge a loan processing fee, covering underwriting and related services. Similar to the origination fee, check with your lender to understand its purpose and possible waivers.
  
• Loan discount points: If you buy discount points to lower your interest rate, you’ll pay a one-time fee at closing. These points can lower your rate by 0.25% to 0.5%, but consider your long-term homeownership plans before paying for a reduced rate.
  
• Private mortgage insurance (PMI): Required for down payments under 20%, PMI might involve an upfront fee at closing, depending on the loan type. It’s usually part of your monthly payment, but some loans offer the option to pay it as a one-time fee.
  
• Title insurance: Title insurance is a one-time closing cost, with buyers commonly paying for both lender and owner policies.
  
• Homeowners insurance: Your annual homeowners insurance premium may be included in your closing costs in New Mexico.
  
• Homeowners Association dues: For homes in HOA-managed communities, you might have to pay one month’s dues at closing, which can vary depending on the property and covers maintenance and operational expenses.
  
• Property taxes: As part of closing costs in New Mexico, you may be required to prepay a portion of your property taxes at closing.

Seller closing costs in New Mexico

The closing costs covered by sellers in New Mexico can vary, but below are some of the common fees and costs that a seller pays for:

• Real estate agent commission fees: These fees can be a significant cost for sellers. Commission fees may vary and are subject to negotiation. Sellers should discuss their options with their agent.
  
• Homeowners Association fees: Sellers are generally responsible for settling any outstanding HOA fees or assessments up to the closing date, and they may need to provide HOA documents to the buyer as part of the sale.
  
• Property taxes: Any outstanding property taxes will be due at this time. However, if the seller has prepaid property taxes for the period that extends beyond the closing date, they may be credited back for the portion they’ve paid but won’t use.
  
• Title insurance: Owner’s title insurance is another common closing cost in New Mexico paid for by the seller.

Median home sale price data from the Redfin Data Center during July 2024.