Purchase CEMA | How to Save Money with a Purchase CEMA Mortgage – Hauseit® (2020)


A Purchase CEMA is a strategy for reducing your closing costs when buying or selling a condo or house in New York City. The Purchase CEMA itself is the act of assigning a seller’s existing mortgage to the buyer. The CEMA reduces the amount of new loan money which must be originated, and this reduces two closing costs: the buyer’s mortgage recording tax bill and the seller’s New York State transfer tax bill. A Purchase CEMA is also known as a Purchase Consolidation Extension Modification Agreement. So, how much money can you save by using a Purchase CEMA? The total closing cost savings from a Purchase CEMA amounts to approximately 2.5% of the existing loan amount. The vast majority of the savings accrue to the buyer’s side, since the buyer will not have to pay the Mortgage Recording Tax of 2.05% to 2.175% on the amount of the existing loan being assigned. The seller saves money by avoiding the New York State Transfer tax of 0.4% of the sale price on the amount of the existing loan. However, just because the buyer’s closing costs are reduced more than the seller’s does not mean that the buyer is entitled to the full amount of savings. Here’s why: a Purchase CEMA requires the consent of the seller, and the seller previously paid the Mortgage Recording Tax when taking out the loan originally. Therefore, the buyer and seller typically negotiate over how to split the total amount of the savings resulting from the Purchase CEMA. To estimate your closing costs in New York City, visit Hauseit’s free interactive closing cost calculator at www.hauseit.com What are some Purchase CEMA Negotiating Strategies for Buyers? Sellers sometimes will resist agreeing to a purchase CEMA mortgage because they feel that they are still on the hook for the original mortgage. However, an experienced buyer’s agent will be able to explain that the seller is completely off the hook through a novation when the existing mortgage is assigned from the seller’s bank to the buyer’s bank. Sellers may also protest that they don’t want to risk any delay to the closing date because of a Purchase CEMA. Your lawyer can counter this by confirming that you will show up to the anticipated closing date regardless of whether you can get a purchase CEMA loan done in time or not. In other words, attempting the Purchase CEMA won’t delay your closing date. What are some Purchase CEMA Negotiating Strategies for Sellers? Having a veteran listing agent is critical if you are anticipating a Purchase CEMA negotiation. First off, a novice real estate agent won’t even be able to tell you what a Purchase CEMA is. Secondly, an inexperienced seller’s agent likely won’t be able to tell you that you can negotiate who gets the savings from a purchase CEMA transaction. Do you remember that we said earlier that a purchase CEMA can only happen if the seller agrees? You can therefore use the power of your consent as leverage! Negotiating to split the savings half and half is a common starting point, though keep in mind what is reasonable will depend on the market demand for your property. Thinking of buying or selling in New York City? Save money with Hauseit, New York City’s largest and most trusted For Sale by Owner and Buyer Closing Credit Company. Hauseit has saved New Yorkers millions of dollars in commission since 2014, and we’d love to help you too. Subscribe to our channel and check us out at www.hauseit.com

1 comment on “Purchase CEMA | How to Save Money with a Purchase CEMA Mortgage – Hauseit® (2020)

  1. Super useful strategy. It's funny, having gone through the buying process before, not once have I heard a buyer's agent tell me about the possibility of doing a purchase CEMA. Unreal. Thank you for shedding much needed light on a super opaque industry: New York City real estate brokerage!

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