In New York there is a mortgage tax based on the loan amount.  For residential mortgages up to $500,000 the rate is .8% (plus an additional 1% for if you live in New York City – Staten Island, Brooklyn, Bronx, Manhattan or Queens) and the rate increases for higher loan amounts.  When refinancing your mortgage you must pay the mortgage tax based on the new loan amount un less you plan wisely.  Here my client paid mortgage tax of 1.8% on his new loan amount $485,000 for a tax of $8730.  Since he paid off his old loan of $470,000 and his new payment was almost $300 a month less, he calculated he would recoup his closing costs in about 41 months (closing costs 12,200 ÷ monthly savings $300).   This refinance made sense but he could have avoided the mortgage tax by doing an assignment and modification and saved about $7200 by getting credit for the amount of mortgage tax paid on the original loan (1.8% of $470, 000) even after calculating the additional modification fees(about $1200).

If you have to pay them to do the refinance they are closing costs.  Call your lawyer before refinancing.  If I can’t help save you money I will tell you to do it on your own but most times I can save you money.  Get a Good Faith Estimate of closing costs and make sure to ask your mortgage broker about doing a modification to save mortgage tax.

Post Footer automatically generated by Add Post Footer Plugin for wordpress.