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Faina Gurevich/Adobe Stock October 17, 2022 Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Bankrate logo The Bankrate promise
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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Buying or selling a home is one of the biggest financial decisions an individual will ever make. Our real estate reporters and editors focus on educating consumers about this life-changing transaction and how to navigate the complex and ever-changing housing market. From finding an agent to closing and beyond, our goal is to help you feel confident that you're making the best, and smartest, real estate deal possible. Bankrate logo Editorial integrity
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Decide where to live in New Mexico
As you think about where you want to call home in New Mexico, keep in mind that housing prices look very different depending on where you’re trying to buy. If you’re looking in the Albuquerque area, Bernalillo County median home prices sat at $315,000 at the midway point of 2022. Head south to the edge of the Chihuahuan Desert, and you’ll find more affordable living in Las Cruces’s Doña Ana County, where median prices were just over $281,000. And if you want to immerse yourself in the magical creative-arts scene of Santa Fe, you’ll need to bring a sizable bank account. Median sale prices in the city climbed to more than $583,000 in the second quarter of 2022, according to the . In addition to comparing the price tags attached to houses, be sure to think about the price of everything else. is a good reference point to help you understand how different places will impact your overall budget for groceries, transportation, utilities and other essentials. For example, the cost of living in Las Cruces is more than 3 percent lower than it is in Albuquerque — certainly something to consider in this age of high inflation. When you’re thinking about buying a home, you need to consider the future, too. Will you be starting a family? Will you want to switch jobs? Be sure to consider the local school system and employment opportunities. It doesn’t have to be your , but pick a place where you can feel comfortable living for at least five years to justify all the one-time closing costs you will need to pay. Tips for buying a house in New Mexico
As you compare home prices in different parts of the state, it’s important to determine what kind of mortgage you’ll need: conventional, jumbo or FHA. In New Mexico, this is fairly simple. If the loan amount exceeds $647,200, the , you will need to compare options for. There is one nuance to FHA loan limits: While $420,680 is the limit for FHA borrowers in most counties, there is one exception: It’s a higher $530,150 in Los Alamos County. Things to know about buying a house in New Mexico
Property taxes: Don’t forget to budget for your annual bill. The good news is that property taxes are very low in New Mexico. According to the , the typical bill is just $884 each year, which is the sixth-lowest in the country. Dual agency: is legal in New Mexico, which means that your real estate agent might represent both you and the seller. There can be an inherent conflict of interest in this situation, so you’ll need to give your written consent if you’re OK with it. Seller’s disclosure: New Mexico home sellers must give you a completed , which will include knowledge of any defects that impact the desirability of the property. This is helpful, but it should not replace a professional home inspection. Closing costs: In 2021, the average closing costs on a New Mexico home added up to $3,513, according to . It’s important to note that this figure does not include fees charged by lenders, so you’ll want to make sure to compare terms to find a lender with low-cost (or no-cost) origination fees. Attorneys: You are not required to hire a when buying a home in New Mexico. However, it’s smart to enlist the services of one anyway. Buying a home is likely the biggest investment of your life, so paying a small additional sum of money for a professional legal OK is worth it. Climate and weather considerations: New Mexico’s dry climate translates to . In fact, studies have shown that approximately 70 percent of residents live in areas with elevated potential for wildfire damage, so you may need to explore additional insurance coverage to protect your property. How much house can I afford in New Mexico
Before you start to move forward with trying to find a place to move, ask yourself this very important question: If your credit is in good shape — a minimum of 620, but a score of 740 will likely qualify you for a much lower interest rate — you’ve checked off the first item on the list. Then, it’s time to think about what’s next for you and your family. Buying a home comes with quite a few closing costs, including escrow fees, lender fees, attorney fees and more. You want to be able to see yourself in the home for a while, otherwise, those one-time expenses aren’t really worth it. If you’re ready to move forward, do the math to figure out what you can comfortably afford to spend. will look at your entire financial picture to help you set a maximum amount for your monthly mortgage payment. Saving for a down payment in New Mexico
In the spring of 2022, the in New Mexico was $23,399. However, if you’re a , you likely aren’t sitting on tens of thousands of dollars extra. You don’t need to feel overwhelmed as you start saving for a down payment: can help you crunch the numbers. You will also find some helpful from the New Mexico Mortgage Finance Authority (MFA). The can help eligible borrowers get a second mortgage worth up to $8,000 to cover down payment and closing costs. The agency’s Home Now program aims to help afford to stop renting with a notable benefit: The loan is forgiven if you remain in the home for 10 years. All of the agency’s programs require a minimum credit score of 620 and a minimum contribution of $500 from your own money. Get preapproved for a mortgage
Before you start house-hunting in earnest, you’ll want to take an important step: . The process involves handing over a range of documents about your personal finances — pay stubs, tax returns, bank statements, etc. A lender will analyze all that info, along with your credit history, to determine how much money they are likely to let you borrow. Then, they will issue a preapproval letter that you can share with sellers to demonstrate your credibility as a buyer. Find the right lender
Even after you get preapproved, you still have find a lender to officially approve your loan. You can go with the same company that preapproved you, but you don’t have to. Look at a few different to get a sense of who can offer you an ideal balance of competitive interest rates, low fees and a fast . If you already live in New Mexico, it’s wise to ask the place where you manage your money — a local credit union or community bank — if they offer any exclusive discounts for existing customers. Find the best local real estate agent in New Mexico
Having a knowledgeable by your side will help you navigate the complexities of a competitive market. A Realtor will listen to what you’re looking for in a new home, find listings that check all (or most) of your boxes, schedule showings for you and more. And if you’re, look for the letters CRP after a Realtor’s name. The acronym stands for Certified Relocation Professional, and it means an agent has been trained in helping clients who are looking for a fresh start in a new, and possibly faraway, place. Start house hunting and make an offer
Now, it’s time for the fun part: Shopping for a place that feels like home. Are you looking for a single-family home with a yard? Or might a condo with no landscaping duties be a better fit for your lifestyle? In Santa Fe, the smaller space can make a massive difference for your budget: Condos and townhomes were more than $155,000 cheaper than standalone single-family homes in the second quarter of 2022. When you find a place that feels like a perfect fit, your agent can help you to bring the seller to the negotiating table. Home inspection and appraisal
Once your offer is accepted, it’s still not quite time to celebrate. You’ll want to get a to make sure the property has no major problems, like a leaking roof or a cracking foundation. In addition to an inspection, your lender will require an to assess the value of the home. This ensures they’re not lending you more than the house is worth; if there’s a , you’ll have to make up the difference. Final walk-through and closing on your New Mexico home
You’re almost at the finish line! But before you cross it, you need to take another look at the home. Schedule a final walk-through to make sure that the property is in the condition you’ve been promised and that any issues identified during your home inspection have been resolved. as a guide. If everything looks good, your next step is the closing table. Be prepared to pay all closing costs — likely via a certified or cashier’s check or a wire transfer — and do some hand exercises before you arrive. You’re going to sign your name on a lot of documents. Then, it’s time to smile and relax. You are a new homeowner in the Land of Enchantment. FAQs
Is it a good time to buy a house in New Mexico
Now is not an easy time to buy a house in most parts of New Mexico. At the beginning of 2022, the median sale price across the state was just over $292,000, according to the New Mexico Association of Realtors. By July, that figure had increased to $305,000. In addition to dealing with rising housing prices, you’ll have to navigate rising mortgage rates. There are, however, some signals that the market is becoming a bit more buyer-friendly. shows an increase in the number of sellers who have needed to drop their prices, and fewer homes have been selling for more than their asking price in recent months.
What credit score do you need to buy a house in New Mexico
Lenders in any state typically want to see a of 620 for borrowers applying for conventional loans. But you’re likely to get the best terms available with a higher score of 740 or above. If your credit is not great, your best bet is to search out an . In some cases, FHA lenders will be willing to consider an applicant with a credit score as low as 500 — but you’ll need to make up for it with a down payment of at least 10 percent.
Is buying property in New Mexico a good investment
That depends on where in New Mexico you’re looking to buy. Vacation destinations like Taos can be a good long-term investment — the ability to rent out your property to tourists is always helpful. But the state’s population growth forecast is not very promising compared with neighbors like Texas and Arizona that have been attracting loads of newcomers. If estimates from a recent study at the University of New Mexico are correct, the state will not grow much over the next decade, which may spell trouble if and when you decide to sell your property. SHARE: Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Related Articles