Cema Agreement

Cema stands for “Consolidation, Extension, & Modification Agreement” and is an agreement between two lenders on an existing mortgage. Think of it as taking over the seller`s existing mortgage. While you`re getting your own mortgage at current interest rates, avoid “capturing” a new mortgage with New York State and NYC, which means you`re also avoiding mortgage tax on that principal. To calculate the usefulness of a CEMA loan, follow these steps. Step 2: Next, calculate the mortgage tax with CEMA by multiplying the new loan amount minus the outstanding principal balance of the old loan multiplied by the mortgage tax rate (for example.B. 200,000 – 100,000 = 100,000 x 1.8% = $1,800 Without getting a CEMA loan, if you were doing a traditional refinancing, you are essentially responsible for paying the mortgage tax on both loans. On the contrary, in the case of a CEMA loan, you consolidate the old loan with the new loan and only pay taxes on the difference. For example, if your outstanding principal balance for your existing mortgage is $100,000 and you refinance your mortgage for $200,000, you only pay mortgage tax on the $100,000 difference instead of the entire $200,000. .

A successful CEMA is never guaranteed, so it should not be decisive for your purchase decision. Lenders still agree to grant mortgages on commercial real estate transactions with an existing mortgage on the property, so there is no reason why they should not be able to participate in their housing loan program. This would be a very advantageous lobbying for buyers of residential real estate. This tax only applies to condominiums and home buyers, as condominiums and homes are considered real estate in the legal sense of the term. A home loan is called a “mortgage” and is recorded in public land registries. If your CEMA is not approved, our team will help you achieve your refinancing goals through traditional refinancing. Our loan officers are here to guide you in this decision. By opting for a CEMA as opposed to a refinancing, you avoid paying mortgage tax on your current credit by consolidating the new loan into the existing one. In other words, you would only pay the registration tax on the difference between the existing capital balance and the new amount of the credit. In the event that both lenders are on board, a CEMA will generally be subject to a procedure. It takes time, but the process is quite formal. That said, there may be problems.

A simple example is if the seller`s lender can`t find the original note. If they don`t find it, they can`t pass it on. It sounds crazy, but the lenders are big and things get lost! Our bank attorney will contact you as soon as they are informed by your current lender of the cema approval status – approximately 2-6 weeks after the filing date (depending on your lender) Step 4: Withdraw all DEMA fees and registration fees incurred by CEMA, giving you the full savings made by CEMA. (z.B. 1800 – 750 = $1,050 (Total Net Savings) For example: Mary owns a house worth $1,000,000 and owes $200,000 for her mortgage…

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