How a Purchase CEMA in NYC Can Reduce Your Closing Costs on a Condo or House

Purchase CEMA Savings Calculator: https://www.hauseit.com/purchase-cema-savings-calculator-nyc/
Save 2% When Buying in NYC: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/

What is a Purchase CEMA in New York City real estate? The Purchase CEMA is one of the most confusing and lesser-known topics in the city which we will aim to demystify in the following video. For those who aren't familiar, I'm Nick at Hauseit. Hauseit is the largest Buyer Agent Commission Rebate and For Sale by Owner company in New York City established in 2014. Visit us at https://www.hauseit.com to learn about ways you can save money when buying and selling real estate in New York City.

So what is a Purchase CEMA? Well we already mentioned that the majority of industry participants have no idea what this means consequentially. Most consumers buyers and sellers have no idea what this means again because most agents and many attorneys have again no idea what on earth. This means well we're gonna tell you exactly what it is, how it works and why you should not forget about it when you're buying or selling a property in New York City.

More specifically, a Purchase CEMA is a strategy for reducing closing costs on the purchase or sale of real property in New York City. A Purchase CEMA is applicable to condominiums and houses but it is not applicable to cooperatives because co-op is not a form of real property. Purchase CEMA itself stands for Purchase Consolidation Extension Modification Agreement.

The Purchase CEMA itself will only assist you in saving money if the seller has an existing loan balance on the property that is being sold. The act of utilizing a Purchase CEMA is to assign the existing loan balance from the seller to the buyer, thereby reducing the amount of new loan money which must be originated and recorded with the City of New York. The act of assigning the current loan balance as opposed to recording a new mortgage alleviates the need for the purchaser to pay the Mortgage Recording Tax on some or all of the loan balance associated with the purchase. The mortgage recording tax is one of the largest buyer closing costs in New York City.

The Mortgage Recording Taxis 1.8% for loans of $500k or less and 1.925% for loans above $500k. Therefore, the Purchase CEMA allows some or all of this particular buyer closing costs to be eliminated. In addition a Purchase CEMA also allows the seller to reduce her or his seller closing costs. More specifically, it helps the seller mitigates the New York State Transfer Tax on the sale any amount of the loan balance which is assigned to the purchaser would alleviate the need to pay the New York State Transfer Tax.

On that particular portion of the sale price, the New York State Transfer Tax is 0.4% to 0.65% depending on the property type as well as the sale price. So just to summarize, a purchase CEMA saves both the buyer and the seller money. The buyer saves money on the Mortgage Recording Tax and the seller saves money on the New York State Transfer Tax.

A Purchase CEMA is a no-brainer if you're buying a property and financing and the seller has an existing loan balance and you're purchasing a condominium or a house. You can calculate the amount of potential savings with a Purchase CEMA using this calculator: https://www.hauseit.com/purchase-cema-savings-calculator-nyc/

Here's an example of how we would use the calculator to figure out how much money can potentially be saved using a Purchase CEMA in NYC. Let's assume that the outstanding seller loan principal is $500k the buyer loan amount is $1 million and the sale price is $1.5 million. The property type is a condominium the buyer mortgage recording tax without the Purchase CEMA is $19,250 whereas with the Purchase CEMA, the buyers mortgage recording tax is reduced considerably to just $9,625. That is the savings on the mortgage recording tax of $9,625.

Calculate Your Buyer Closing Costs in NYC: https://www.hauseit.com/closing-cost-calculator-for-buyer-nyc/
Purchase CEMA FAQ and Overview: https://www.hauseit.com/purchase-cema-mortgage/
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Hauseit LLC, Licensed Real Estate Broker
Tel: (888) 494-8258 | https://www.hauseit.com
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