CEMA in NYC: Save Big On Real Estate Closing Mortgage Taxes


Did you know that there are ways to save thousands on your next purchase or refinance? You can save big whether you are the buyer or the seller. The methods we use to save you money on mortgage taxes are known as consolidation, extension and modification or CEMA. In the state of New York, mortgage taxes are calculated as a percentage of the amount borrowed and normally range from less than one percent to over two percent of the loan amount. The range will fluctuate depending on which county you reside in. In the five boroughs of NYC the amount you are borrowing will also affect he tax rate.


How does CEMA work?

The CEMA process allows existing mortgages to get assigned from an existing lender to your new lender. This assignment is what legally allows one to avoid paying some or all of their mortgage tax a second time. This may seem rather simple, however in reality the process of consummating a CEMA can be pricey and time consuming. CEMA also requires cooperation from several different sources.

In simple terms, taking advantage of CEMA will mean paying mortgage tax on the difference between your remaining unpaid principal balance and the new loan amount. To clarify exactly how one will save money here is a straight forward example: A NYC resident has an existing mortgage for the sum of $100,000 on which mortgage tax was initially paid at a rate of 1.8%. They have been paying their monthly mortgage on time and their current unpaid principal balance on the mortgage is currently $90,000.00. Mortgage rates have begun to decline to the point that they want to refinance their home and even increase their mortgage loan to $125,000.00. When this type of scenario occurs they have to pay mortgage tax on the difference ($35,000.00) between the $125,000.00 and the $90,000.00 and do not have to pay mortgage tax on the entire $125,000.00.

In the five boroughs of NY, Saving money on closing mortgage taxes can be tricky. One should seek the help of a diligent and knowledgeable NYC real estate  attorney that specializes in closings and mortgage taxes.

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