Last Updated on June 5, 2017 by Taylor Welshe
With its diverse culture, friendly people, majestic landscapes, and friendly climate, it’s quite easy to see why so many people want to become home owners in New Mexico. Furthermore, it has a relatively low cost of living and great education system, making it a great place to live, even start a family in. Los Alamos and Santa Fe are just two of its vibrant cities that both the state’s residents and visitors love. (Source: Livability.com)
How affordable home ownership in the state is
Majority of the population of the Land of Enchantment can only afford to purchase a house through taking out a mortgage. However, it is worthy to note that real estate here costs less than in other parts of the country. The median home value in the state $171,800, as opposed to the nationwide median of $195,300. (Source: Zillow)
Single-family homes remain the least expensive type of residential property, with an average value of $111,025.66. Condominiums are the priciest, valued on average at $122,747.75.
Making the decision to become a home owner
Consumers who decide to make the switch from a renter to a home owner should take a long, careful look at their finances. Yes, home ownership is one of the most satisfying, rewarding experiences one can ever have, but it also comes with a hefty price. Factors to consider include how much they can afford, length of time they plan to stay in the same house, if they have enough money for a down payment, and other financial responsibilities.
It’s also crucial to factor in what they can do to trim their expenses.
Which type of mortgage is best?
There are two primary forms of mortgages: the fixed-rate and the variable-rate (also known as adjustable-rate). The one that best suits a certain borrower depends on a variety of factors, which is why everyone applying for a mortgage should first explore their options and understand the risks and rewards of both.
Cost of fixed-rate mortgages
One thing that attracts so many borrowers to fixed-year mortgages is their locked-in interest rates. Once borrowers sign the contract with their chosen lender, they will make the same amount of payments for the rest of term (usually 30 years, although 15- and 40-year terms are also available). In most cases, consumers who have plans of staying long-term in the same house opt for this specific type of home loan.
In this state, 30-year fixed-rate mortgage rates average at 4.5%.
Cost of variable-rate (adjustable-rate) mortgage
The second type of housing loan that residents of this state can apply for is the variable-rate mortgage. These loans typically have a lower interest rate in their first few years (usually up to the first five years), which is its primary attraction. However, as soon as this promotional feature expires, the interest rate can already go up or down. In most cases, it does the former.
The average ARM rate in the state is 3.62%.
Help with mortgage-related concerns
Aside from abundant natural wonders and resources, New Mexico also offers its current and soon-to-be residents with help when it comes to home buying.
For those who have difficulties raising money for down payment and closing cost, they can turn to the New Mexico Mortgage Finance Authority for help. The organization also provides assistance for home buyers with income limits in order for them to find a house with a purchase price they can afford.
There is also the Mortgage Credit Certificate program, which gives qualifying applicants a tax credit. This reduces federal taxes they have to pay, resulting in freed up income that eligible candidates can then use to purchase or maintain their home.
New Mexico Mortgage Finance Authority
Mortgage Credit Certificate