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How to Reduce Costs When Buying a House – CEMA

By September 28, 2023Industry, Local2 min read

Buying a house can be a significant financial commitment, and finding ways to reduce costs is always beneficial. In New York, one cost-saving option available to homebuyers is the Consolidation, Extension, and Modification Agreement (CEMA). CEMA is a legal document that can help lower the closing costs associated with refinancing or purchasing a property. Here’s how CEMA works and how it can help you save money:

  1. What is CEMA?

    CEMA allows homebuyers to take advantage of an existing mortgage on the property being sold or refinanced. Instead of paying for a new mortgage and associated fees, the buyer assumes the seller’s existing mortgage and modifies it to reflect the new loan terms.

  2. Lower Mortgage Recording Tax

    One of the primary advantages of CEMA is the potential reduction in mortgage recording tax. The mortgage recording tax is a fee imposed on the mortgage amount and is typically paid by the buyer. With CEMA, the tax is only calculated based on the difference between the existing mortgage balance and the new mortgage amount, resulting in significant savings.

  3. Title Insurance Discounts

    CEMA can also provide savings on title insurance premiums. When a CEMA is executed, the existing title insurance policy is extended to cover the new loan amount, reducing the premium payable by the buyer.

  4. Lender Approval and Additional Requirements

    It’s important to note that not all lenders or mortgage loans are eligible for CEMA. The existing mortgage must meet certain criteria, and the lender needs to approve the use of CEMA. Additionally, there may be specific requirements and paperwork involved in executing a CEMA, which should be carefully reviewed and understood.

CEMA can be a valuable cost-saving option for homebuyers in New York. However, it’s essential to consult with a real estate attorney or a knowledgeable professional to determine if CEMA is suitable for your specific situation. They can guide you through the process and ensure compliance with all legal and financial requirements.

If you have any questions regarding your specific circumstances, don’t hesitate to contact us today