If you`re a homeowner in New York City, chances are you may have heard of a CEMA agreement. But what exactly is a CEMA agreement, and how can it benefit you?
CEMA, or Consolidation Extension and Modification Agreement, is a legal document that allows homeowners to save money on mortgage taxes when refinancing their homes. Under the CEMA agreement, the borrower`s existing mortgage and the new mortgage are consolidated into one loan, and the borrower only pays taxes on the difference between the old and new mortgage amounts.
CEMA agreements can save homeowners a significant amount of money in mortgage taxes. In New York City, the mortgage tax is typically 1.8% of the total mortgage amount. So, for example, if you are refinancing a $500,000 mortgage, the mortgage tax would be $9,000. However, with a CEMA agreement, if your old mortgage was $400,000 and your new mortgage is $500,000, you would only pay mortgage taxes on the $100,000 difference, which would be $1,800. That`s a savings of $7,200!
CEMA agreements can only be used in certain situations, such as when refinancing a property that has an existing mortgage. The refinancing lender must be willing to participate in the CEMA program, and the existing mortgage must have been recorded in the New York City Register`s office.
It`s important to note that while a CEMA agreement can save you money on mortgage taxes, it may not always be the best option. CEMA agreements can be more complex than a regular refinance, and there may be additional fees associated with the process. It`s important to speak with a qualified mortgage professional to determine if a CEMA agreement is the right choice for your specific situation.
In conclusion, if you are a homeowner in New York City and are considering refinancing your mortgage, a CEMA agreement may be worth exploring. It can potentially save you thousands of dollars in mortgage taxes, but it`s important to weigh the pros and cons and consult with a knowledgeable professional before making any decisions.