CEMA Mortgage
Published by Contour Mortgage on July 15 2015

CEMA Mortgage: How You Can Save NYS Mortgage Tax

Topics: Refinancing

The advantage of a CEMA mortgage on your home refinance.

The only certainties in life are death and taxes, right?

Not so fast, we say.

Just like paying tax on an item you buy in a store, when you purchase a mortgage, you will be charged New York State mortgage tax. In most counties, this fee is  .8% of the mortgage amount (minus $30). So, let's say you are applying for a $400,000 mortgage. It would cost $3,170 in mortgage tax. In New York City and the boroughs, where almost everything is charrged at a premium, the tax is 1.8% -$30, which totals $7,170 on the same amount.  

Now for the good news. When refinancing in New York, there's a process that can save you money on closing costs. It's called a CEMA (consolidation, extension, modification agreement).  The easiest explanation is that the lender can record papers with New York State to show that the homeowner had previously paid the mortgage tax when they closed on the home, which eliminates the need to pay it again on the current mortgage balance. Any "new money" being borrowed over the current balance is subject to the mortgage tax.   

Now for the not-so-good news (but still, not bad news.) There is a few hundred dollars in fees associated with the CEMA process, but it usually saves a lot of money when compared to paying the full mortgage tax all over again.

Have questions? Check with your Contour Mortgage professional who is refinancing your loan for more information on how they can save you money on your mortgage tax with a CEMA mortgage.

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