What is roll in?
Roll in is when the costs of a loan are added to the principal balance. Roll in, which is also called “rolling” or “to roll,” is commonly used by borrowers who either don’t have the money to pay the loan costs upfront or don’t want to pay loan costs out of pocket.
Rolling is fairly common, so most loan costs can be included in the loan balance, especially in the case of a mortgage. Lender fees, such as origination fees, are frequently rolled in, while “prepaids,” like per diem interest, cannot be included in the roll in. By rolling in the loan costs, the borrower doesn’t initially feel the impact of the loan costs. But she will over time. The trade-off of choosing to roll in is that it increases the loan amount and the borrower pays more interest over time. Some of the other costs that might be rolled in to the loan balance include appraisal fees, fees for title services and title insurance, survey fees and document preparation fees.
Roll in example
When mortgage borrowers face $4,000 in costs associated with refinancing a mortgage, they have decisions to make. If they have the funds on hand, they could pay the loan costs outright. Or, they could roll the $4,000 into the loan balance. When choosing to roll in, the total balance of the loan increases, in this case by $4,000. The choice to roll in would also result in a higher amount of interest to be paid over the life of the mortgage. Before a mortgage borrower considers rolling in, he or she must weigh the benefits and losses of each decision.
Use Bankrate’s calculator to help you determine whether a mortgage refinance is right for you.