New York CEMA loans: Everything you need to know

Homeowners in New York state who refinance their mortgage may be able to significantly reduce their mortgage tax bill with a CEMA mortgage, which consolidates their current mortgage debt and the new loan.¹ Learn more about how CEMA loans work and if one can save you money when refinancing.

Key takeaways:

• A CEMA loan allows owners of homes in New York state to consolidate their loans when refinancing to reduce their mortgage tax bill.
• CEMA loans involve your original lender transferring your loan to your new lender and consolidating it with your new loan in a single mortgage.
• These loans often require fees to your lenders and usually take longer than a traditional refinance.

What is a CEMA loan?

The state of New York charges a mortgage tax on new mortgages, which applies whether a new loan is used to buy or refinance a home. Some New York municipalities and counties charge their own mortgage tax in addition to the state tax.

Government taxes and fees are levied on the principal of any new mortgage. Nationwide, the range is 0.01% – 2.19% of the loan amount, according to recent Lodestar data – in the states and localities that charge mortgage recording taxes. If you’re taking out a mortgage for $262,000, the tax would be $26.20 – $5,737.80.²

To reduce this tax, you can get a consolidation, extension, and modification agreement loan, commonly known as a CEMA loan. A CEMA loan is an agreement between the lender of your current mortgage and the lender of your new mortgage to consolidate your old and new loan into a single mortgage.

The original loan is reassigned to the new lender, and you generally pay mortgage tax only on the portion of the new loan that exceeds the unpaid principal balance being assigned from the existing mortgage.

For example, imagine you want to refinance your mortgage with a balance of $400,000 to a $480,000 mortgage. Your home is in Yonkers, which has a 1.8% mortgage recording tax. Instead of paying $8,640 in taxes through a traditional refinance, you’ll pay $1,440 instead.²

Who can qualify for a CEMA loan?

To qualify for a CEMA loan, there are a few specific parameters you must meet.

• The home must be in New York.
• The property must be a house or condo (co-ops don’t pay these taxes).
• You also have to find a lender who will process this type of loan.
• Both your original lender and your new one have to agree to this because of the debt transfer involved in a CEMA loan.

Rocket Mortgage offers CEMA loans and can help you determine if this is the right option for you.

What are the fees associated with CEMA loans in New York?

Lenders typically charge processing fees and legal or attorney fees to ensure the loan transfer goes smoothly. The amount you pay will differ depending on the lender, but you’ll most likely need to pay fees to both your current and new lender.

Some may also charge recording fees to legally record your new loan with New York and local government agencies. These fees don’t include other up-front closing costs that you’ll need to pay for a refinance.

How long does it take to get approved for a CEMA loan?

A CEMA loan takes longer to process than a traditional refinance. Lenders need to work together to send, receive, and process documentation, as well as ensure the final closing complies with New York law.

It could take 45 – 60 days for your current lender to send all required documents to your new one. All in all, it could take up to 75 days to close on a CEMA loan. On the other hand, it’s not uncommon for a standard refinance to take 15 – 30 days.

CEMA loans vs. home equity loans vs. HELOCs

A CEMA loan replaces your current home loan with a new one. You can use a CEMA loan to get a cash-out refinance, where your new loan is based on your home’s current value. In the consolidation, you pay off your current loan and keep the difference in cash. You repay the equity you’ve borrowed as part of your new loan.

In comparison, a home equity loan is a second mortgage. Rather than pay off your existing primary mortgage, you take a new mortgage only on the equity you want to access in a lump-sum payment.³

A home equity line of credit (HELOC) is a second mortgage that you pay alongside your primary mortgage. A HELOC uses your equity to establish a line of credit. You can borrow from the HELOC as needed during the draw period, making payments on what you borrow. In the repayment period, you can no longer draw from the HELOC and must make regular payments to pay off the balance and interest.

Both allow you to borrow your equity, though how you receive and repay the loan is different.

Rocket Mortgage offers cash-out refinances and Home Equity Loans. Rocket Mortgage does not offer HELOCs. Ask a Home Loan Expert to help you with a blended rate calculation to determine what’s best for you.

A blended rate calculation involves taking a weighted average interest rate between your current mortgage and your new home equity loan or HELOC balance like so:

((Balance 1 × Interest rate 1) + (Balance 2 × interest rate 2)) ÷ (Balance 1 + Balance 2)

If the resulting rate is lower than what you would receive by doing a cash-out refinance, it makes sense to do the home equity loan or HELOC. Otherwise, you should do the refi.

Pros and cons of CEMA loans

As with all types of loans, there are advantages and disadvantages to CEMA loans.

Pros

• Lower mortgage tax payments: You may be able to save a significant amount on mortgage tax with a CEMA. Because you’re taxed only on the difference between your current principal balance and your new loan amount, the result is lower than being taxed on the entire new loan.
• Save on loan costs: Just like with a traditional mortgage refinance, a CEMA loan allows you to swap out your current loan terms for a new loan with better terms, such as a lower interest rate, to save money.

Cons

• Lender fees: You need to pay fees to get a CEMA loan. Once you talk to your existing lender and the new one about the figures, you need to consider this cost when deciding whether a CEMA loan saves you more than a traditional refinance.
• Long processing time: A CEMA loan may be more complex than a traditional refinance, as the original lender needs to work with the new lender to review documents and ensure all documentation is accurate. While a regular refinance may often close within 30 days, a CEMA loan may take up to 75 days to close.
• You could be denied: Your existing lender has to agree to let you do the CEMA loan. If they don’t, you may be unable to move forward with anything other than a traditional refinance.

When is a CEMA refinance the best choice?

A CEMA refinance may be better if your main goal is to save on mortgage recording tax as a New York homeowner. Before you sign the dotted line, make sure the potential savings are worth it. Consider the following:

• The bigger the difference is between your original loan amount and your remaining principal balance, the more you could save.
• If the CEMA fees you need to pay are the same or more than the amount you’ll save on mortgage tax, the longer wait and additional paperwork for a CEMA may not be worth it.

FAQ

Here are answers to common questions about New York CEMA loans.

Where do I get a CEMA loan?

CEMA loans are available only for properties in New York state. Not all mortgage lenders in New York offer CEMA loans. Rocket Mortgage does. We would be happy to help you determine if you qualify and whether it’s the best option.

Can I use a CEMA loan to refinance a co-op?

Co-ops in New York count as personal property. Since you own individual shares in a co-op, these properties aren’t tied to real property attached to land, so you won’t qualify for a CEMA loan and are not required to pay mortgage tax.

The bottom line: CEMA loans can make refinancing more affordable

A CEMA loan can help New York homeowners save thousands of dollars on mortgage recording taxes when refinancing their property. Though the process may take longer and involve coordination between multiple lenders, the significant tax reduction often outweighs the wait.

Ready to make a move? Apply online with Rocket Mortgage today to see what you qualify for.

¹ Refinancing may increase finance charges over the life of the loan.

² Any figures, interest rates, loan examples, and market data referenced in this article are hypothetical or aggregated for educational purposes only. They are not intended to reflect current pricing, available terms, or personalized loan options for any consumer. This content does not constitute an advertisement of credit terms, a solicitation or offer to extend credit, or a rate quote under federal or state lending laws. Actual mortgage rates and terms are determined by individual financial qualifications, property characteristics, market conditions, and other factors, and are subject to change without notice. If you are seeking current, real-time mortgage rate information please refer to the official live rate information and product details published at RocketMortgage.com/mortgage-rates, where current pricing and various loan terms are made available.

³ Home Equity Loan product requires full documentation of income and assets, credit score and max loan-to-value (LTV), combined loan-to-value (CLTV), and home equity combined loan-to-value (HCLTV) ratios. Requirements were updated 11/19/25 and are tiered as follows: 680 minimum FICO with a max LTV/CLTV/HCLTV of 80%, 700 minimum FICO with a max LTV/CLTV/HCLTV of 85%, and 740 minimum FICO with a max LTV/CLTV/HCLTV of 90%. Your debt-to-income ratio (DTI) must be 50% or below. Valid for loan amounts between $45,000.00 and $500,000.00 (minimum loan amount for properties located in Michigan is $10,000.00). Product is a second standalone lien and may not be used for piggyback transactions. Product not available on Ameriprise products. Guidelines may vary for self-employed individuals. Some mortgages may be considered “higher priced” based on the APOR spread test. Higher-priced loans in the State of New York are subject to additional regulatory requirements. Additional restrictions apply. This is not a commitment to lend.

This article is for informational purposes only and is not intended to provide financial, investment, or tax advice. You should consult a qualified financial or tax professional before making decisions regarding your retirement funds or mortgage.

Rocket Mortgage is a trademark or service mark of Rocket Mortgage LLC or its affiliates.