Mortgage Rates New Mexico: Assistance For First-Time Homebuyers

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In New Mexico, the housing supply is dwindling, yet demand is rising – creating a competitive housing market. If you’re looking to call the state home, knowing the local mortgage and refinance rates can help you stand out from other offers without breaking the bank.

In this guide, we go over all you need to know about mortgage rates in New Mexico. We provide inside access to the most current rates and share tips on how to get your dream New Mexico home.

Mortgage Loan Options In New Mexico

American homebuyers can choose from three types of mortgage loans for home purchase and refinancing. Here’s a breakdown of each:

Conventional Home Loans

Conventional mortgages are any type of loan not offered by government entities. These home loans are issued through private lenders and secured by guarantor companies Fannie Mae & Freddie Mac.

Most conventional loans adhere to limits set by the Federal Housing Finance Agency (FHFA). In New Mexico, the average conforming loan limit is $548,250, on par with the national average.

Fixed-Rate Mortgage

In a fixed-rate mortgage, borrowers enjoy constant interest rates & APR. Due to this unchanging mortgage rate, your monthly payment amount will not change for the loan’s entire life. The rate stability and predictability make fixed loans popular among long-term financial planners and new homeowners on a budget.

Fixed-rate mortgages are typically issued in 30-year loan terms, although you can also get 15-year and 20-year loan terms. Shorter-term loans often come with a higher monthly payment amount, but lenders offer better rates & APR to make up for it.

Adjustable-Rate Mortgage (ARM)

The interest rate & APR on an adjustable-rate mortgage (ARM) change annually based on the performance of a lender-chosen market index. The lower introductory rates & APR on an ARM make them popular for short-term savings.

To offset the unpredictability of the ARM adjustment, ARMs usually have an introductory fixed-rate period lasting several years. The fixed-rate period on an ARM is denoted by its name. For example, a 5/1 ARM’s introductory period lasts five years, after which the rate will adjust.

Jumbo Mortgage

Not all homes are priced under loan limits. To help you purchase higher-valued property, your lender may offer what’s called a jumbo loan. A jumbo allows you to exceed local loan limits but saddles you with a higher interest rate & APR.

Government-Backed Loans

In addition to private lenders, several federal agencies also offer mortgages aimed at certain borrowers. These loans generally come with lower interest rates and more relaxed qualification requirements.

The three major government loan programs are:

FHA loan: These low-down-payment loans are aimed at low-income borrowers. FHA borrowers also enjoy relaxed credit score requirements, although they need to pay private mortgage insurance (PMI) fees during the entire loan.
VA loan: This loan is meant to boost the homeownership rate among military members and their families. It features no down and very lenient qualification requirements, making it easier to purchase a first home. However, while VA loans have no PMI cost, borrowers must pay upfront funding fees.
USDA loan: To get a USDA loan, you must buy a home in designated rural areas and meet a certain income requirement. If you qualify, you’ll enjoy a waived down payment and lower PMI fees compared to FHA loans.

Mortgage Refinancing

Refinancing a mortgage means taking out a new loan to pay off your old one. This is usually done to achieve one of two things:

Change your loan’s type or length: With a rate and term refinance, you can modify your mortgage’s length and type. For example, you can change an ARM into a fixed-rate loan before the introductory period finishes. You can also use it to shorten a loan to get better rates and pay it off quicker.
Convert home equity into cash: Once you’ve built enough home equity, cash-out refis can provide you with more money than your current loan balance. After you pay off your current mortgage, any money left over can be used for other purposes.

Current New Mexico Mortgage Rates

Mortgage rate trends in New Mexico are somewhat higher than national average rates. Here are the most current New Mexico mortgage and refinance rates.

This data is taken from America’s major mortgage lenders and updated daily.

Today’s Mortgage Rates in New Mexico

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Keep in mind that your rates & APR may vary depending on your financial condition. The listed rates may also change without prior notice.

For a more personalized look at your New Mexico mortgage rate & APR, check out the rate tool at the top of this page. Just input your details, and we’ll provide you with a customized New Mexico mortgage rate estimate!

First-Time Homebuyer Programs In New Mexico

New Mexico offers many homebuyer assistance programs for new residents. Through the New Mexico Mortgage Finance Authority (MFA), the state offers several programs to help residents buy homes affordably.

To qualify, a first-time homebuyer must:

Have not owned a home in the past three years
Meet the minimum credit score and income limits
Buy property valued under the home price limit
Contribute $500 of their own money to the mortgage

MFA FirstHome

The FirstHome assistance program offers mortgages at competitive rates. In addition to the aforementioned requirements, you need to complete a homebuyer education course to qualify.

State Down Payment Assistance Programs

Alongside the FirstHome mortgage program, the MFA also offers several down payment programs. These can be combined with your FirstHome loan to help you save more on your home purchase.

MFA NextHome

NextHome offers a forgivable loan to cover down payment, lender fees, and closing costs. If you keep the same home for 15 years, you don’t need to pay for your NextHome loan. Repeat homebuyers in the state can also qualify for this down payment assistance program.

MFA FirstDown

The FirstDown allows you to take a second mortgage of up to $8,000 to pay your down payment, closing costs, and lender fees. To get FirstDown assistance, you first need to qualify for a FirstDown.

However, unlike NextHome, the FirstDown program is not forgivable – you have to pay it off in the form of additional monthly payments on top of your regular mortgage.

Buying A Home In New Mexico

Buying a home is a complicated process. To help you understand the home buying process, we’ve simplified the journey into six easy steps:

Step 1: Determine Your Loan Size

Your financial situation has a large impact on the kind of homes you can afford. A good rule of thumb is to keep your monthly payments at 25% of your income. From there, you can work out your home price ceiling.

Step 2: Apply For A Home Loan

The next step is to apply for a loan. Make sure your credit report is in great condition and compare loan offers between multiple lenders. If you’re still considering which loan type to take, you can consult with your lender.

After the mortgage company checks your financial status, you’ll be given a preapproval letter. This is an essential document as getting pre-approved shows the seller that you’re serious about buying their home.

Step 3: Find A Realtor

A real estate agent with local experience can make the home buying process easier. Good real estate agents don’t just show you homes – they also serve as experts on the zip code. They’ll answer any questions you have about the area, like the average property value, local amenities, and area property tax rates.

Step 4: Search For The Right Home

Most good house hunts start at the neighborhood level. Pick a neighborhood that fits your lifestyle and budget, then search local listings there. We recommend picking a property with the most affordable home value, so you can pay for home improvements with the remaining mortgage balance.

Step 5: Make An Offer

It’s likely that you’re not the only one looking to buy the same home. Before making an offer, ask your realtor for advice. They can recommend how much you should bid above the listed home value to make an enticing offer. This prevents you from making an offer far beyond the actual home value and going way over budget.

Step 6: Due Diligence & Closing

Before you schedule your closing date, be sure to schedule a home inspection and appraisal first. These help you ensure that the house is free of issues and is appropriately valued.

On closing day, make sure you have the money to pay closing costs and lender fees. There’s going to be a lot of paperwork, so make sure your real estate agent is there to explain any unclear details. Once everything is signed, you’re ready to move into your new home!

How To Get Better Mortgage Rates In New Mexico

Since mortgages are a long-term commitment, even the smallest of mortgage rate & APR reductions can help you in the long run. To help you get better New Mexico mortgage rates, here are our three top tips.

Purchase Discount Points

Mortgage points are fees you can pay at closing for an interest rate & APR reduction. On average, discount points are worth 1% of your loan amount and provide a 0.25% rate reduction. For example, buying two points on your $200,000 mortgage with 4.5% interest means you spend $4,000 to reduce your rates to 4%.

However, it’s important to note that discount points don't always translate to savings. Sometimes, the upfront cost can outweigh your long-term savings. Do the math to see whether buying discount points are actually worth it.

Work With Independent Mortgage Brokers

Researching mortgage offers alone can be stressful, especially if you don’t know what you’re supposed to be looking at. With their extensive experience, a mortgage broker can help you compare multiple lenders for the best offers and lowest rates. Because they’re doing the heavy lifting in the mortgage search, you can concentrate on finding that perfect New Mexico home.

Shorten Your Loan

A shorter loan has reduced rates and charges lower interest. However, before you ask about cutting your loan term in half, be sure that the extra monthly payment amount will still be affordable.

Closing Thoughts

New Mexico is a popular state to live in for many reasons, but that translates into a more competitive housing market. Knowing the local mortgage rates and comparing lenders can get you a leg up on the competition.

If you’re looking for the best mortgage for your New Mexico home, Wesley LLC is here to help. Contact us today for a mortgage consultation!