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CEMA Loans: Everything You Need To Know

Andrew Dehan4-minute read

June 08, 2023


There are some loan options that only apply to where you live. For those in New York, you may have heard of CEMA loans. This is a great mortgage option for those looking to refinance their mortgage loan.

Let’s define CEMA loans, talk about what makes them special and how to determine if this type of loan is the right option for you.

What Is CEMA?

A Consolidation, Extension and Modification Agreement, or CEMA, loan is an option available to New Yorkers that can drastically reduce the cost to refinance a mortgage. CEMA loans allow borrowers to pay mortgage recording taxes on only the difference between their current principal balance and their new loan amount.

In New York, taxes are collected for recording any new mortgage with the state during the home buying process. Along with the state tax, New York City, Yonkers and several counties apply an additional local tax on recording a mortgage. In NYC, this tax ranges from 1.8% – 1.925% of the mortgage.

If you’re refinancing in New York, you could avoid paying mortgage recording tax and save yourself a large sum of money. Let’s break down the numbers.

CEMA By The Numbers

Here’s an example of how you could save money by refinancing your mortgage with a CEMA loan.

  • Mortgage balance: $350,000
  • Closing costs: $17,500
  • Local tax rate: 1.8%
  • CEMA fees: $1,400
  • Total amount paid in taxes without CEMA: $350,000 x 1.8% = $6,300
  • Total amount paid in taxes with CEMA: $17,500 x 1.8% + $1,400 = $1,508

CEMA loans come with their own set of fees which vary by loan but, despite the fees, the CEMA loan refinance in this example would save you $4,792.

Note that if you were to do a cash-out refinance, increasing your mortgage balance to $400,000 and taking $50,000 in cash, that $50,000 would be subject to the mortgage recording tax. CEMA would still make more sense, with a difference of $4,585.

When Is A CEMA Refinance The Best Choice?

A CEMA refinance makes sense over other traditional mortgage refinances in areas with high mortgage recording. They also make more sense when refinancing loans with a higher remaining balance.

Another thing to consider is whether you’re switching banks. If that’s the case, you may have to pay extra transaction or legal fees to take out the CEMA loan.

What Are The Qualifications For A CEMA Loan?

CEMA loans have a few qualifications. First, they’re exclusive to the state of New York. While there is a possibility to buy with a CEMA, the majority of CEMA loans are refinanced mortgages.

The biggest hurdle you will have to clear is finding a lender that does CEMA loans. It’s best if this is your current lender, as changing lenders can cost more and take longer. If you’re considering refinancing to a CEMA, speak with your lender about it as soon as possible.

Co-ops do not qualify for CEMA because New York doesn’t collect mortgage recording tax on co-op ownership. That’s because personal shares in a co-op aren’t considered real estate.

Consolidate debt with a cash-out refinance.

Your home equity could help you save money.

Important CEMA Mortgage Considerations

There are two key aspects of CEMA mortgage applications to consider. We touched on these earlier, but let’s expand on them a bit.


There are several fees that can be applied to a CEMA refinance. These heavily depend on your lender. If your lender works with CEMA loans and has agreed to process the loan, your fees will be significantly less.

However, if you’re working with a new lender, expect more fees. Your current lender may charge a fee to assign the loan to a new lender. They may also charge a legal fee on top of that. These vary from lender to lender, ranging from a flat fee to a percentage of the loan.

On top of CEMA fees, if you’re paying more upfront closing costs, you may find a refinance option like a no-closing-cost refinance to be the better one for you.

Time To Completion

The other main thing to consider with a CEMA loan is the time it takes to complete. Not only may you have to go through the process of switching lenders, but New York regulations may slow it down even further.

It may take 30 – 90 days from application for your CEMA loan to be completed. If you’re in a situation where you need the refinance sooner, a conventional loan might be a better option.

What Are The Pros And Cons Of CEMA Loans?

Let’s discuss some of the advantages and disadvantages that come with CEMA loans.


  • Save money: Since you’re only paying mortgage recording taxes on the difference between your current principal balance and your new loan amount, you’ll be able to save a large amount of money.
  • Refinancing benefits: Just like with a traditional mortgage refinance, you might even be able to obtain a lower interest rate on your loan, change your loan terms or access cash with a cash-out refinance.


  • Lender fees: Depending on your lender, you might have to pay a fee in order to assign your loan to a new lender. You could also end up paying legal fees during this process as well.
  • Long processing time: A CEMA loan can take anywhere from 30 – 90 days to officially be completed.

The Bottom Line: CEMA Loans Could Save You Money

It’s already expensive to live in New York, especially in NYC. On top of closing costs, you’ll face a significant mortgage recording tax when refinancing. This is where CEMA loans come in.

If you’re refinancing, it may make more financial sense to apply for a CEMA Loan. You may have to jump through more hoops, and it may take more time, but it could end up saving you thousands.

If you’re looking for a CEMA lender, or for another mortgage solution, get started on a refinance with Rocket Mortgage®.

Consolidate debt with a cash-out refinance.

Your home equity could help you save money.

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Andrew Dehan

Andrew Dehan is a professional writer who writes about real estate and homeownership. He is also a published poet, musician and nature-lover. He lives in metro Detroit with his wife, daughter and dogs.