Albuquerque Home Buyers Closing Costs
Fees related to the sales transaction are typically considered Closing Costs. Who pays those fees can vary substantially from market to market and in different states across the US. Although many closing costs are entirely negotiable local customs and trends often outline the standards. Below is a general breakdown of typical closing costs paid by an Albuquerque NM home buyer for their purchase.
Based on a median-priced New Mexico home of $250,000.00, this example also assumes a 20% down-payment. Please note this is only a sample; each purchase contract will define who will be responsible for the applicable fees. Lenders have a range of pricing they may or may not charge and can vary widely. Insurance carriers base their premiums on acquired data and can vary substantially.
($0 to 1%) This is a fee charged by the lender to originate the loan. This charge may vary considerably depending on your choice of lender and loan type. You could have a flat rate or a percentage of the loan amount. Be sure to ask your mortgage professional exactly how much it will be. Some mortgage brokers may not charge an origination fee at all but will instead charge an Underwriting Fee. Be sure to discuss all costs with your lender early in the conversation.
($500 to $600). The appraisal charge is negotiable between the parties and ordered by the lending bank. The appraisal is an opinion of value typically based on comparable properties. The bank requires the valuation to validate the agreed purchase price, thus protecting their collateral position. Banks will only loan an amount up to the appraised value.
($0 to $120). Charged by the lender for a credit inquiry and to obtain your FICO scores. A FICO score can weigh heavily on your interest rate and overall ability to acquire the loan. A better FICO score often equates to a better interest rate. You can, however, buy your interest rate down; some borrowers will do this to glean a more affordable payment and, in the long term, reduce the cost of the loan.
Tax Service Fee:
($85.00) Often negotiated as a seller paid fee. This fee pays a 3rd party service company to monitor and assure the property taxes are kept current. The service may help avoid a possible tax lien.
Flood Certification Fee:
($20.00 to $25.00). Gathers information about any flood zone that may impact the property. If it is in a floodplain zone, the buyer would need to obtain flood insurance.
(.35% to.40% of Purchase Price) This varies considerably depending on the price of the home, provider, chosen coverage, history of claims, etc. You will pay the annual policy amount upfront, so the property has insurance coverage for the year. Another 2-4 months of premiums will also be collected to start your escrow account. This escrow builds as you make your monthly mortgage payments so that funds are available to pay the homeowners’ insurance premium the next year.
Prepaid Property Taxes:
This is a variable value set by the assessor’s office. The purchase price plays a significant role in property tax amounts. As a buyer, you may receive credit for unpaid property taxes. The lender will collect 3-4 months of property taxes to start your escrow just as they did for the hazard insurance.
Varies with the loan amount and loan type. MIP or Mortgage Insurance Premiums apply to FHA loans (Government-backed Loans) PMI or Private Mortgage Insurance apples to Conventional loans (Private non-government backed loans).
With our 20% percent down scenario, PMI would not be required. Conventional loans with less than 20% down will require Private Mortgage Insurance. The FHA MIP or Mortgage Insurance Premium is required regardless of the down payment. You will have an upfront fee and a monthly premium.
Mortgagee Title Policy:
($100.00-$225.00) Includes most endorsements. This policy protects the Mortgagee (the lender) with title insurance. There are often endorsements included for Mechanics liens, survey coverage, and others.
($380.00 to $500.00 plus). Inspection fees are negotiable between the parties. Inspections may involve a typical home inspection or a combination of options. A full home inspection generally covers the mechanical functions of a home like a roof, heating & cooling, electrical, windows, doors, and plumbing. Ancillary inspections may be a sewer-duct scope, radon testing, lead paint, and Termites. In a rural area, you may need the water well tested and septic systems analyzed.
($50.00+-) This fee is for recording the mortgage, deed of trust, or warranty deed plus any other public documentation with the County Clerks office.
There may be additional fees from the lender and or the title company. Document Preparation, Processing, Tax Transcripts, Air Freight, and Filing fees may also be inclusive with your final settlement.
Every transaction is different, and every settlement is unique. Your Realtor® and your Lender should be providing you with estimates of these closing costs. The lender is required to disclose all charges related to your loan known as a CD or Closing Disclosure.
For more questions on your Albuquerque home buying process, please don’t hesitate to contact me anytime.