 Our business is dedicated to saving the borrower, the state, and possibly the local mortgage tax by arranging for an assignment of the remaining principal balance on the existing mortgage to the new lender, and negotiating with the new lender to accept the assignment. The County Clerk calculates mortgage tax based on the size of the mortgage being filed. Arranging for an assignment as described above, allows the new lender to file a mortgage only for the difference between the total new loan amount and the remaining principal on the existing mortgage, (this mortgage is often referred to as a new money mortgage). Thus the tax is only paid on the new money amount lent in excess of the outstanding principal due on the existing mortgage. This procedure often results in thousands of dollars in tax savings. Example: Lender A (existing lender) Existing Principal $400,000.00 (assigns mortgage to lender B) Lender B (new lender) New Loan Amount $600,000.00 Mortgage tax based on $200,000.00 loan as opposed to a $600,000.00 loan. For purchase transactions the seller may be able to save thousands on closing costs as well. As a result of the sellers cooperating with assigning the sellers existing mortgage to the purchaser's new lender, the seller may be able to reduce the state and possibly the local transfer tax due as a result of the sale of the property. The County Clerk calculates transfer tax based on the purchase price of the property being sold. However, subject to certain limitations, as a result of the sellers assigning this existing mortgage to the purchaser's new lender the seller may receive a reduction in transfer tax due as a result of the continuing lien deduction. The continuing lien deduction would allow the seller to pay the transfer tax only on the difference between the purchase price and the amount of the existing mortgage assigned to the purchaser's lender. Although often complicated and time consuming these transactions can be a real win, win situation for all parties involved. The seller may save transfer tax, and both the borrower and lender may save mortgage tax. |