ALBUQUERQUE, N.M. — With mortgage rates bumping below 4 percent, now may time to buy a house in New Mexico. But be prepared for higher-than-average closing costs, thanks to new rules enacted by Uncle Sam.
The Land of Enchantment has the 12th-highest closing costs in the country, a new Bankrate.com report showed. Closing costs in the state averaged $2,231 on a $200,000 loan, about 100 bucks more than the national average of $2,128.
Last year, New Mexico had the sixth-highest closing costs in the ranking, according to the online financial services provider.
In 2016, New Mexico’s average origination fee was $1,078, or money that goes back to the lender, and the state’s average third-party fees were $1,153.
Hawaii has the highest mortgage closing costs in the country and Pennsylvania has the lowest, according to Bankrate.com. Based on a $200,000 loan, the Aloha State’s closing costs averaged out to $2,655 while the Keystone State’s closing costs were $1,837.
“Thanks to the new and improved mortgage disclosures that the CFPB [Consumer Financial Protection Bureau] introduced last October, closing cost estimates have become more accurate, because they mandate that lenders include all costs ahead of time,” said Holden Lewis, Bankrate.com’s senior mortgage analyst. “This is great for consumers who can now comparison shop with more confidence.”
Bankrate.com surveyed up to 10 lenders in all 50 states and Washington, D.C., in June. Researchers obtained online loan estimates for a $200,000 mortgage to buy a single-family home with a 20 percent down payment. Costs included fees charged by lenders and third-party fees for services such as appraisals. The survey excluded discount points, taxes, title fees, property insurance, association fees, interest and other prepaid items.
The increased closing costs both here and around the country is attributed to government intervention into mortgage lending in the wake of housing bubble and subsequent mortgage meltdown.
Lewis has a theory about variation in the closing cost arena. Some states “have more of a culture of comparison shopping, and that may keep prices lower,” he said. In the Northeast, many states are “attorney closing” states, which means buyers, sellers and lenders are all represented by a lawyer. Hence the higher bill.
As for New Mexico’s higher average closing costs, Lewis said it was possible that Bankrate.com surveyed smaller mortgage lenders whose costs of compliance is higher on a per-loan basis.
Indeed, Kevin Hoover, a mortgage advisor with Albuquerque Pinnacle Capital Mortgage, said the company has staffed up by one full-time person to meet federal regulations. “There is much extra work on the lender side to make sure everything is in order,” he said. “It has to be absolutely perfect.”