Jeanne M. Reardon

A standard refinance paying off an existing mortgage with the proceeds from a new loan.  In order to decide whether this is worthwhile, the savings in interest must be weighed against the fees associated with refinancing. Other reasons to refinance include reducing the term of a longer mortgage, or switching between an adjustable-rate and a fixed-rate mortgage.

A cash-out refinance is taking a loan for more than you owe on your existing mortgage. Your existing mortgage is paid off from the new loan proceeds and you receive the balance of the new loan. You might do this if you want to make home improvements or pay for a child's education. Cash-out refinancing removes some of the equity you have built up in your home.

Closing costs are the fees paid when you close on a refinance loan. These fees may include application fees; title examination, abstract of title, title insurance, and property survey fees; fees for preparing deeds, mortgages, and settlement documents; attorneys' fees; mortgage recording tax; recording fees; estimated costs of taxes and insurance; and origination, appraisal, and credit report fees. Under the Real Estate Settlement Procedures Act (RESPA), the borrower receives a "good faith estimate" of closing costs within three days of application.

“CEMA” stands for Consolidation, Extension and Modification Agreement.  A CEMA allows borrowers to save on the amount of the mortgage recording tax associated with the refinance. 

CEMA is a tool that can help a borrower save thousands of dollars in mortgage recording tax on the new loan amount.  In reality, rather than having the original mortgage satisfied and discharged of record, the original mortgage is assigned to the new lender. The parties execute a new mortgage for refinance closing costs and for additional funds if it's a cash-out refinance, and an agreement which assigns the original mortgage to the new lender and consolidates the original and new mortgage into one mortgage. The borrower would only have to pay taxes on the amount of the new loan that exceeds the unpaid balance of the original loan, such as closing costs or cash out.  Although it can be a lengthy process, a CEMA is well worth the additional time as it can save a borrower thousands of dollars in mortgage recording taxes which would otherwise be payable at closing.

Contact our expert Long Island mortgage refinance attorneys today to find out how we can help you save thousands of dollars in closing costs, specifically mortgage recording tax, by refinancing your mortgage with a Consolidation, Extension and Modification Agreement (CEMA).