{"id":1131,"date":"2022-05-13T16:40:33","date_gmt":"2022-05-13T20:40:33","guid":{"rendered":"https:\/\/www.realtyhop.com\/mortgage-center\/?p=1131"},"modified":"2023-07-22T13:36:33","modified_gmt":"2023-07-22T17:36:33","slug":"ny-cema-loans","status":"publish","type":"post","link":"https:\/\/www.realtyhop.com\/mortgage-center\/ny-cema-loans\/","title":{"rendered":"A Guide to NY CEMA Loans"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">When you own a home, there will come a time when you need to refinance your mortgage. Refinancing involves replacing your current mortgage with a new one, often with different terms. You might get a better interest rate and lower monthly payments. You might also refinance and <a href=\"https:\/\/www.realtyhop.com\/mortgage-center\/cash-out-refinance\/\">take out some cash<\/a> to work on your new renovation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Just like when you apply for a new mortgage, when you refinance, there are often fees and <a href=\"https:\/\/www.realtyhop.com\/mortgage-center\/mortgage-closing-costs-explained\/\">closing costs<\/a> involved, but they can vary from lender to lender and from state to state.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In New York, homeowners who finance and refinance their home purchase need to pay a 0.5% mortgage recording tax. In addition to the state tax, <a href=\"https:\/\/www.realtyhop.com\/for-sale\/new-york-ny\">New York City<\/a>, <a href=\"https:\/\/www.realtyhop.com\/for-sale\/yonkers-ny\">Yonkers<\/a>, and a few other counties also apply local tax for recording a mortgage. For instance, in New York City, for mortgages under $500,000, the recording tax is 1.8% (including the state portion) and 1.925% for mortgages above $500,000.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">What does this mean? Suppose you are looking to refinance your home for $400,000. You will need to pay an extra $2,000 just to cover the mortgage recording tax, on top of other closing costs such as <a href=\"https:\/\/www.realtyhop.com\/mortgage-center\/mortgage-origination-fee\/\">origination fees<\/a>, <a href=\"https:\/\/www.realtyhop.com\/mortgage-center\/what-is-an-appraisal\/\">appraisal fees<\/a>, etc. In New York City, this number goes up to $7,200.<\/span><\/p>\n<p><b>How the math works<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Scenario 1: New York State<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Refinance loan balance = $400,000<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">State mortgage recording tax rate = 0.5%<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Mortgage recording tax = $400,000 x 0.5% = $2,000<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Scenario 2: Counties with local mortgage recording tax<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Refinance loan balance = $400,000<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Local + state mortgage recording tax rate = 1.8%<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Mortgage recording tax = $400,000 x 1.8% = $7,200<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Thankfully, there is a way you can drastically reduce the cost of refinancing, and that is through using a CEMA loan. In this guide, we&#8217;ll look at what CEMA loans are, how they work, their benefits and drawbacks, and so much more.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What is a CEMA Loan, and How Does it Work?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">CEMA stands for <em>Consolidation, Extension, and Modification Agreement<\/em>. It&#8217;s a program exclusively for New Yorkers that lowers the cost to refinance a mortgage by reducing the amount of mortgage recording tax they have to pay.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When a traditional refinance takes place, you essentially take out a new mortgage loan to replace and pay for your old one, often with new terms and rates. However, with a CEMA loan, you are simply modifying your existing debt obligation into a new loan. This consolidation means that you only need to pay the mortgage recording tax on the difference between the amount of your new loan and your existing principal balance.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, say your current mortgage balance is $300,000, your local tax rate is 1.8%, and your new loan is $400,000. Instead of paying $7,200, you only need to pay $1,800, based on the difference of $100,000. In other words, you&#8217;ll save $5,400 on the mortgage recording tax by refinancing with a CEMA loan.<\/span><\/p>\n<p><b>How the math works<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Current mortgage balance = $300,000<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">New mortgage balance = $400,000<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Difference between current and new mortgages = $100,000<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Local + state mortgage recording tax rate = 1.8%<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Mortgage recording tax without CEMA = $400,000 x 1.8% = $7,200<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Mortgage recording tax with CEMA = $100,000 x 1.8% = $1,800<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Total savings = $7,200 &#8211; $1,800 = $5,400<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">While it varies case by case, this could mean thousands of dollars in savings for homeowners. A CEMA loan is traditionally used to refinance a home, but there are rare occasions where it can be for new home purchases, too. All homeowners can likely benefit from a CEMA, but it is especially helpful when the loan has a high remaining balance.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Pros and Cons of a CEMA Loan<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">To truly get a sense of these loans and whether they are the right fit for you, you need to take an honest look at their main benefits and drawbacks. The first and most obvious benefit of a CEMA mortgage is that it can save you money. By only paying a portion of this mortgage recording tax instead of on the total balance of the new loan, most homeowners can save thousands.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The major drawback of a CEMA loan is its strenuous process. It requires approval from the state as well as previous lenders. Because of the requirements, it often takes well over two months to close, whereas a conventional refinance might only take a month or less. If you need to close quickly or simply aren&#8217;t very patient, a CEMA loan might not be for you.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What are the Requirements for a CEMA Loan?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">CEMA loans come with a few requirements. First, you need to be a New York resident to take advantage of CEMA.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Next, while CEMA loans work for many types of properties, they will not work for <a href=\"https:\/\/www.realtyhop.com\/coops-for-sale\/new-york-ny\">co-ops<\/a>, as personal shares in co-ops are not considered real estate. So, if you own a co-op, you will need to work with a lender that offers conventional loans.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Another requirement is actually finding a lender that offers CEMA loans. Not all lenders work with CEMA loans, so be upfront about your desire as early as possible. If possible, try and stay with your current lender when getting a CEMA, as changing lenders can introduce more costs and take even longer.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">The Process of Getting a CEMA Loan<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">As briefly mentioned earlier, the process of getting a CEMA loan can be a long one. The first step is to express your interest in a CEMA with your lender. Since the process involves a lot of paperwork, we recommend that you let your lender know as early as possible.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If your current lender works with CEMA loans, you&#8217;ll likely be able to close it faster and avoid most additional fees. However, if your lender doesn&#8217;t offer such an option, you will have to find a new lender. Switching lenders could potentially introduce more fees. The process might also take longer as you&#8217;d need your current lender to approve assigning your existing mortgage to a new one. Remember to compare the costs if you need to switch lenders. The costs incurred might be greater than the savings on the mortgage recording tax.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Once your application is submitted, it&#8217;ll take a while for the lender to process the application and get the state&#8217;s approval. The whole process can take anywhere from 30 to 90 days. While the process is long and stressful at times, this is still an excellent option to consider if you are patient and able to wait.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>When you own a home, there will come a time when you need to refinance your mortgage. Refinancing involves replacing your current mortgage with a new one, often with different terms. You might get a better interest rate and lower monthly payments. You might also refinance and take out some cash to work on your [&hellip;]<\/p>\n","protected":false},"author":25,"featured_media":1132,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"no","_lmt_disable":"","footnotes":""},"categories":[27,5],"tags":[],"class_list":{"0":"post-1131","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-featured","8":"category-refinancing"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>A Guide to NY CEMA Loans - RealtyHop Mortgage Center<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.realtyhop.com\/mortgage-center\/ny-cema-loans\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A Guide to NY CEMA Loans - RealtyHop Mortgage Center\" \/>\n<meta property=\"og:description\" content=\"When you own a home, there will come a time when you need to refinance your mortgage. Refinancing involves replacing your current mortgage with a new one, often with different terms. You might get a better interest rate and lower monthly payments. 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