Roll In

A roll in refers to the action of including certain fees in a mortgage, rather than paying them separately. Many borrowers roll certain fees into their mortgages as a way to avoid high costs upfront. They may choose to do this because they simply don’t have the funds available at the beginning of the loan, or because they would rather amortize the fees, paying smaller amounts over a longer period of time.

Many borrowers roll fees into a mortgage out of necessity. However, if they have the funds available to pay the fees upfront, they will usually save a significant amount of money by doing so. This is because those fees are added to the mortgage’s principal amount, which the buyer then pays interest on for a set number of years.

Roll in can be used interchangeably with "to roll" or "rolling.” The process can apply to a variety of different fees. Lending fees, such as loan origination fees can generally be rolled into a mortgage. Government fees, which vary by region may be rolled in as well. These can include filing fees, administrative costs and certain taxes. Real estate transactions tend to involve attorneys, whose fees may also be rolled into a mortgage.

When a borrower refinances a mortgage, the refinance often comes with certain fees. If the borrower has enough equity in the home, the lender may allow the cost of the refinance to be rolled into the new mortgage.

Government-backed loans through entities such as the Federal Housing Administration and the Department of Veterans Affairs often allow borrowers to roll in other closing costs and insurance fees. Many loans made through these entities aim to make mortgages more accessible to low or middle income people. Rolling in costs can aid in that by lowering upfront costs.

Not all costs related to purchasing a home can be rolled into the mortgage. Costs known as prepaids must be paid upfront and may not be rolled in. Often, this is because prepaid costs must go into an escrow account.

Prepaids may include property taxes, homeowner’s insurance and private mortgage insurance. They are known as prepaids because they are paid before they are actually due. For example, property taxes may only be due to a home’s municipality once per year. However, a lender will collect those taxes well in advance of that date and hold the payment in an escrow account for payment when they come due. Having this money in escrow protects the lender in the event that the borrower defaults on payments in the future.