Thomas is obtaining construction financing for a new home in Albany County. The construction loan will be $400,000, and upon completion, it will convert to a permanent mortgage of $380,000. How does New York mortgage recording tax apply to this construction-to-permanent loan structure?
Correct Answer
A) Tax applies only to the $400,000 construction loan amount when initially recorded
For construction-to-permanent loans in New York, the mortgage recording tax typically applies to the full amount of the original construction mortgage when it is first recorded. The conversion to permanent financing is generally considered a modification of the existing mortgage rather than a new taxable recording event.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
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