Refinancing Closing Costs
Does anyone know how closing costs on a refinancing compare with those on a purchase? How are title insurance + the nortgage recording tax different?
Does anyone know how closing costs on a refinancing compare with those on a purchase? How are title insurance + the nortgage recording tax different?
in regards to purchase cema, its a great thing when ti can happen, it saves lots of money to the buyer on a purchase and it saves the seller money on the nyc transfer tax.
however not all lenders will give a purchase cema, and not all lenders will accept a purchase cema, wells fargo does accept purchase cema’s.
in regards to closing costs on a refi, as adam stated the two bigf ticket item is the mortgage tax and the title insurance, however when you refinance from one lender to another lender the cema costs are higher because the old lender charges money to give the cema and the bank attorney charges more money to prepare the cema docs.
i can only say form my knowledge here at wells, when doing a wells to wells internally, we do not charge the client a cema fee, one that would be charged when to a wells to wells on the wholesale side, and the bank attorney would not charge anything extra because they dont prepare any extra docs as wells does all the legwork, and saves the borrower money.
just my humble understanding and knowledge.
benjamin.levin@wellsfargo.com
Re: “Purchase CEMA”
I think this means re-assigning an existing mortgage to the new home buyer, instead of applying for the entire purchase amount through a new application.
We were advised by our bank that our fixed rate mortgage (at an excellent rate) could not be re-assigned to the new buyer. Besides being able to qualify for credit, the Bank said it was only possible to re-assign for an ARM, or, if the new buyer on the fixed rate was an immediate family member.
Not applicable for our situation at the time, but hopefully useful for someone else.
I only wish I had more time to spend with you guys. Closing out a bunch of loans this week which should give me more time to contribute.
Is the “the what” gone for good?
Thank you Adam Dahill,
Your informed and detailed response validates the usefullness of blogs.
OK, real quick as I’m swamped with work and other personal stuff.
This is for 1-4 familys and condos. NOT COOPs and this is just general not super specific.
NYS Mtg Tax in the 5 boroughs is 1.8% of the loan amount on either a purchase or refi.
On a refi you can do a CEMA which is a legal document that assigns the old loan to the new bank. You do not have to pay the MTG tax on the “old money”
quick example
old loan 200k
new loan at 250k (50k cash out aka “new money”)
NYS MTG Tax without CEMA 250 x 1.8% = $4,500 mtg tax
NYS MTG tax with CEMA 50k x 1.8% = $900 mtg tax
the title company or attorney preparing the CEMA will have a slighly higher fee for doing the work and your exisitng lender “may” charge a fee as well but they are no more than a couple hundred dollars. You will also have an additional recording fee as they will have to record the CEMA at the clerks office.
TITLE INSURANCE: You will still have to pay title insurance regardless if you already have it and regardless if you closed last month.
Under New York law title companies must provide discounts of 50 percent on refinancings of $250,000 or less, and 30 percent on loans above $250,000, when:
the loan being refinanced is less than 10 years old, and
legal title to the property has not changed during the life of the loan being refinanced.
Those are your 2 big ticket items when considering to refinance. I highly recommend doing a CEMA if you are in the 5 boroughs.
SILVER LINING!!!
For those with COOPs you should expect your closing costs to be between 2k-3k
I’ll go into detail one of these days about PURCHASE CEMAS which allow you to not pay the Mtg Tax on the difference of the sellers mortgage and your loan amount. Hard to do but it can save both the buyer and seller thousands of dollars.
Too busy got to go.
adahill@approvedfunding.com
Thank you all. When I bought my house in 2003, closing costs were about 5.0%-6.0% of the purchase price. Before I pursue a refinancing, I want to guesstimate what they would be on a refi. My 2003 mortage was a hybrid arm, fixed for 7 years at 5.375% and adjustable after that at one year treasury + 2.75%. If my mortgage reset today, the rate would actually go down to about 3.25% because short term rates are at historic lows. With the government printing money like crazy, I worry about inflation (+ rising rates) 2-3 years down the road. My original loan was a jumbo, but I’ve paid it down to within striking distance of conforming. If you live anywhere but NY, the cost of refinancing is minimal. The closing costs here are ridiculous.
Boerum,
Work this out with whomever you are doing your loan with, but I think if you do a CEMA, you don’t pay tax on existing principle. But if you fold closing costs into the loan, you pay tax on that.
Do you pay mortgage tax if you’re only refinancing existing principal (no cash out)?
Do you have to get/pay for title insurance again?
This is a good Adam Dahill question. Recording tax varies greatly depending upon whether you are doing your refi as a new mortgage (tax on the whole principle) or CEMA (tax on any amounts borrowed above outstanding principle). Refi usually requires a new appraisal, HELOC often done using a database (bank’s version of zillow). No appraisal fee if appraisal done via database, but if LTV isn’t met, then you may need to spring for a real appraisal if you think it will make a difference. Also, you don’t have to purchase title insurance; you already have it.