For years, each time a client in New York decided to refinance their home, they would pay a New York state mortgage tax on the entire new loan amount.

But living in the “Empire State,” shouldn’t have to mean paying a lot of taxes to refinance YOUR empire.

So instead of paying thousands of dollars in taxes, clients can obtain a Consolidation, Extension and Modification Agreement or CEMA loan.  Quicken loans is pleased to offer CEMA loans because clients only have to pay taxes on the amount of the new loan that is above and beyond their current unpaid principal balance, such as closing costs or cash out.

CEMA loans are only available on conventional, jumbo and FHA refinances.  VA loans are not available.

The CEMA loan can help to reduce the amount of money a borrower pays in NY state mortgage taxes.  Here’s an example:

  • Loan amount = $300,000
  • Financed closing costs = $8,000
  • Queens County tax rate = 2.05%

Without CEMA:

Loan amount of $300,000 x 2.05% tax rate = $6,150 total tax

With CEMA:

Financed closing costs $8,000 x 2.05% = $164 total tax + CEMA fees*

*Keep in mind CEMA loans have some additional fees involved that could make it less advantageous.  Fees can range anywhere between a few hundred dollars to a few thousand dollars.  These fees typically cover CEMA assignment fees, closing fees and processing fees.  If the CEMA fees totaled $1,120 in the example above, the homeowner would clearly benefit from using a CEMA loan.

However, it’s important to note that CEMA loans may not always be a good fit, as tax rates and attorney fees vary, making it possible for a non-CEMA loan to be more cost-effective.  But most clients should find that a CEMA loan makes perfect sense.  So New York homeowners can start spreadin’ the news that CEMA is now available at Quicken Loans!

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This Post Has 11 Comments

  1. If I don’t have enough time to wait for cema to process can I claim the amount I shouldn’t have paid on my taxes or is there something I could do? It doesn’t make sense I have to be penalized because of a slow turn around time. thank you

  2. Two questions:

    1. Does the mortgage tax exemption apply to outstanding HELOC balances, or only mortgage balances? Does it make any difference if the HELOC was used for construction of improvements to the residential structure?

    2. In order to obtain the CEMA mortgage interest exemption, does the CEMA/refinance have to be with the same lender who hold the current mortgage, or does it apply to any new lender?

    Thank you.

  3. Are CEMA refinances used only for cases where the new loan is greater than the existing loan? I plan to refinance my current mortgage and pay down the existing balance, reducing the loan amount by $30k. Additionally, I plan to pay for my closing cost out of pocket to further reduce the principal amount.
    Thank you for your advice.

    1. Hi Lynda, thanks for reaching out to us, I have forwarded your inquiry to one of our home loan experts who will contact you to answer your questions and see if we can be of assistance. Have a great day.

  4. I was recently turned down for an equity loan from Quicken Loans. Would I possibly qualify for a CEMA loan? I’d appreciate it if you could review the recent application that was submitted for the equity loan, and let me know if you would fund a CEMA loan instead.

    Thanks…

    Nicholas Dianto

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