Loan Assumption Fees in Hobbs, NM – Costs to Consider

When buying or selling a home in Hobbs, New Mexico, one option that can simplify the process is assuming an existing mortgage. However, loan assumption fees can add unexpected costs to the transaction. Understanding these fees—and how they fit into today’s volatile housing market—is crucial for buyers and sellers alike.

What Are Loan Assumption Fees?

Loan assumption fees are charges imposed by lenders when a new borrower takes over an existing mortgage. These fees cover administrative costs, credit checks, and processing the assumption agreement. In Hobbs, NM, these fees can vary depending on the lender, loan type, and market conditions.

Why Consider a Loan Assumption?

In a high-interest-rate environment, assuming a loan with a lower rate can be financially advantageous. For example, if the original mortgage has a 3.5% interest rate and current rates are above 6%, the buyer saves significantly over the loan’s lifetime.

Key Costs to Expect in Hobbs, NM

1. Lender Processing Fees

Most lenders charge a flat fee or a percentage of the loan balance to process an assumption. In Hobbs, this typically ranges from $500 to $2,500. Government-backed loans (like FHA, VA, or USDA) may have different fee structures.

2. Credit Check and Application Fees

Lenders require a credit check to ensure the new borrower qualifies. This fee usually falls between $50 and $150. Some lenders also charge an application fee, adding another $100–$300.

3. Title and Escrow Fees

Even with an assumption, title searches and escrow services are necessary to confirm legal ownership. In Hobbs, title fees can cost $500–$1,200, while escrow fees add another $300–$800.

4. Transfer Taxes and Recording Fees

New Mexico imposes a transfer tax on real estate transactions, typically 0.1%–0.5% of the sale price. Recording fees (around $50–$200) are also required to update county records.

5. Legal and Notary Fees

Hiring a real estate attorney to review documents may cost $200–$800. Notarization fees are smaller ($10–$50 per signature) but can add up.

How Today’s Economic Climate Affects Loan Assumptions

Rising Interest Rates and Housing Affordability

With mortgage rates at 20-year highs, many buyers are seeking alternatives to traditional loans. Assumptions allow them to lock in lower rates, but lenders may tighten eligibility requirements in response to economic uncertainty.

Inflation and Fee Increases

As inflation drives up operational costs, lenders may raise assumption fees. Buyers should budget an extra 10%–15% compared to pre-pandemic rates.

Supply Chain and Construction Delays

Hobbs’ growing oil and gas industry has increased demand for housing. However, supply chain issues slow new construction, making assumptions an attractive option for faster closings.

Tips for Minimizing Loan Assumption Costs

Negotiate with the Seller

Some sellers may agree to cover part of the assumption fees to close the deal faster. This is especially common in competitive markets.

Compare Lenders

Not all lenders charge the same fees. Shopping around can save hundreds—or even thousands—of dollars.

Review Loan Assumption Policies

FHA, VA, and USDA loans have different rules. VA loans, for example, often have lower fees and more flexible credit requirements.

Plan for Additional Expenses

Even with an assumption, buyers should budget for property taxes, insurance, and potential repairs.

Final Thoughts

Loan assumptions can be a smart financial move in Hobbs, NM, but they come with costs. By understanding these fees and staying informed about economic trends, buyers and sellers can make better decisions in today’s challenging real estate market.