The Cost of Buying your Home

The Cost of Buying your Home

When purchasing your home, you will have two types of closing costs involved with the transaction; Loan and Title Company.

Loan Costs – Your lender will provide you with a “Good Faith Estimate of Closing Costs” before your closing as to what these costs will be.  Below, you will find the averages for fees charged by lenders and third parties.  Take into consideration, not every lender charges every fee.

Origination Fees by Lender

  • Application Fee: Not all lenders charge this fee, but of those that do, it averages $345.

  • Origination Fee:  Normally 1% of the loan amount collected by the lender to process the loan.

  • Processing Fee:  Charged by the lender to cover costs associated with the processing and closing of a mortgage loan. Rates can range up to $500.

  • Underwriting Fee:  A fee collected by the lending institution to have the loan reviewed for final approval. In New Mexico, it averages $200.

  • Document preparation fees: The lender or broker will usually have a fee to cover the preparation of the required documents for the loan.  Average fee $75.

Third Party Fees

  • Homeowner’s Insurance: When borrowing money to purchase a home, insurance is required. You will need to purchase this before your closing.  Annual costs for a homeowner’s insurance policy can be estimated by dividing the value of the home by 1,000, then multiplying the result by $3.50.
     

  • Appraisal fees: An appraisal is needed so that a current fair market value for your home can be established for tax purposes.  Normally start at $400 for a single family home.
     

  • Credit report fees: In order to secure a loan, the lender will require a verified credit report. Usually around $50.

Other Considerations

  • Private Mortgage Insurance (PMI): If you provide a down payment of less than 20% of the purchase price of your home, you are required to purchase private mortgage insurance.  Generally this insurance is will be rolled into your monthly payment.  The PMI rate is figured as a percentage, usually around 1 to 2 percent, of the outstanding principal amount of the loan, and then divided into twelve monthly payments. So if your loan has a principal balance of $150,000, and the annual premium at the PMI rate of 1 percent is $1,500, or $125 a month.

Closing Costs
Closing costs are the fees you will pay as part of a standard closing. The majority of closings in Taos County are thru a local title company.  Some of the standard fees include, but are not limited to, the following:

* The above fees were based on a Bankrate.com survey. They surveyed up to 10 lenders in NM in June 2012 to obtain online good faith estimates for an average single family home with a 20 percent down payment.

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