Before buying a home in New Mexico — or any other high-demand state — you’ll need to know the regulations and rules that govern that state’s housing market.
New Mexico requires anyone selling a home to disclose to a prospective buyer so-called “material” defects that might affect a home’s value or livability. State law also requires sellers to provide prospective buyers with an estimate on how much they may need to pay in property taxes before a purchase offer is accepted. To do this, sellers (or their brokers) are first required to get tax information from a local county assessor’s office, using the home’s list price as a basis for the estimate.
As a potential homeowner in New Mexico, it’s important to know what might happen if your mortgage goes into default and a lender proceeds to foreclose and sell your home. In New Mexico, lenders have the right to take you to court to recover any balance that might be due if the proceeds from the home’s sale are less than the remaining mortgage amount.
A divorce can cast a pall over a couple’s dream home. For that reason, it’s also important to know that New Mexico — unlike most states — is a community property state. This means all assets and debts acquired during a marriage need to be split evenly, 50/50. Assets acquired separately before the marriage are allowed to stay with that spouse.
New Mexico is also an escrow state. This means an attorney does not need to be present at a home closing. Instead, buyers and sellers can use an escrow agent, closing agent or a representative from a title company.
Unlike most states, New Mexico does not charge a transfer tax when real estate property changes hands.
According to Tax-Rates.org, New Mexico has one of the lowest property tax rates in the country, with the rate now averaging 0.55% of a home’s assessed value. As a result, residents now pay a median amount of $880 per year, based on a home value of $160,900. If you live in Albuquerque, expect to pay considerably more; Bernalillo County has a 0.81% property tax rate, the highest in the state, and the tax averages $1,530 per year.
As a homeowner in New Mexico, you may be able to qualify for an exemption to help lower the amount of property taxes you pay each year. The exemption is good for up to $2,000 of the taxable value of your home; to qualify, you’ll need to be a New Mexico resident who is also the head of your particular household. In this case, the exemption applies not just to someone who is the head of a family, but also to single individuals and anyone who pays property taxes through some type of homeowner or condominium association. New Mexico also offers a tax exemption to permanently disabled veterans or their surviving spouses.
In every county in New Mexico, the 2019 conforming loan limit for a single-family home is now $$484,350, the same for most of the U.S. Higher limits apply for both multi-family homes, and in areas where housing costs are more expensive.
If you’re buying a home, it’s key to know the conforming loan limit in your county because it represents the maximum amount you may be able to borrow for the conforming loans insured by Fannie Mae and Freddie Mac. These two government-sponsored entities work to make the mortgage market more stable and affordable for consumers. The conforming loan your lender offers you will generally offer a better interest rate than a so-called jumbo loan for a higher amount.
In New Mexico, homebuyers can tap into a variety of programs for help finding — and paying — for a more affordable home.
The New Mexico Mortgage Finance Authority (MFA), the state’s designated housing agency, offers programs targeted toward low- to moderate-income residents, either first-time buyers or those who have owned before.
Read on to learn more about MFA programs. You may also be interested in the down payment help that Homewise, a New Mexico nonprofit, offers through its access to the national NeighborhoodLIFT program.
The FIRSTHome program provides affordable mortgages to low- to moderate-income, first-time buyers. Qualified borrowers who need help paying for a down payment can pair a FirstHome mortgage with a second mortgage, either a FIRSTDown or a HOMENow loan (see details below).
This program provides up to $8,000 in down payment and closing cost help to first-time buyers in the form of a fixed-rate, second mortgage.
HOMENow loans provide down payment and closing cost assistance to first-time buyers who have lower incomes. The loan amount is either equal to 8% of the sale price of the home, or $8,000, whichever amount is less.
Both first-time buyers and previous buyers may qualify for this program to receive a combination loan that includes a primary mortgage and a second loan to help pay down payment and closing costs. The second loan is equal to 3% of the first mortgage loan amount.