DEFINITION of 'Roll In'

A term which refers to including loan costs into the initial principal balance of a loan. This is a common practice by mortgage borrowers who do not have funds available, or who do not want to pay loan costs out of pocket. While most loan costs (lender fees) may be included into a mortgage balance, "prepaids" (ex. per diem interest) cannot.

"Roll in" is used interchangeably with "to roll" or "rolling". For example, a borrower could say "I'm broke, I want to roll in my loan costs into the loan balance", or "I'm broke, I want to roll my loan costs into the loan balance", or even "I'm broke, and I'm rolling my loan costs into the loan balance."

BREAKING DOWN 'Roll In'

To roll in costs into a mortgage balance is an opportunity-cost decision. For example, if the costs associated with refinancing a mortgage are $4,000, and the borrower has $4,000 available that they could use to pay those costs, the borrower should make the decision based on the economic (or utility) benefits and losses. By not using the $4,000 to pay loan costs, and instead rolling in the $4,000 into the loan balance, the borrower would have increased not only the total balance of the loan, but also the amount of interest that will be paid over the life of the mortgage. A thorough analysis should be completed before making these major decisions.

RELATED TERMS
  1. Direct Consolidation Loan

    A loan that combines two or more federal education loans into ...
  2. Future Advance

    A clause in a mortgage which enables the lender to advance funds ...
  3. Combination Loan

    1. A transaction consisting of two separate loans for the same ...
  4. Renegotiated Loan

    The result of an agreement between a borrower and a lender to ...
  5. Interest Cost

    The cumulative sum of the amount of interest paid on a loan by ...
  6. Term Loan

    A loan from a bank for a specific amount that has a specified ...
Related Articles
  1. Investing

    Financing Basics For First-time Homebuyers

    If you're looking to get your first mortgage, there are many financing options available.
  2. Investing

    Financial Institutions: Stretched Too Thin?

    Find out how to evaluate a firm's loan portfolio to determine its financial health.
  3. Personal Finance

    Understanding Term Loans

    A loan from a bank for a specific amount that has a specified repayment schedule and a floating interest rate.
  4. Retirement

    Business Owners: A Guide To Qualified Retirement Plan Loans

    Thinking of adding a loan feature to your company's plan? Here's what you need to know.
  5. Retirement

    The Reverse Mortgage: A Retirement Tool

    Discover another way to fund your retirement without having to make payments on a loan.
  6. Personal Finance

    Interest-Only Mortgages: Home Free or Homeless?

    These loans can be beneficial, but for many borrowers, they present a financial trap.
  7. Retirement

    Sometimes It Pays to Borrow from Your 401(k)

    401(k) loans have been demonized, but they're often the most beneficial source of cash.
  8. Personal Finance

    Parents: Beware of Taking Out a Direct PLUS Loan

    Direct PLUS loans are heavily advertised to parents who want to help support the financial costs of their child's education, but are they a good idea?
  9. Personal Finance

    8 Top Alternatives to Car Title Loans

    Before you sign up for a car title loan, investigate these 8 alternate strategies.
RELATED FAQS
  1. How do construction loans work?

    Construction loans are obtained either by the prospective home owner or the actual builder. There are two types of construction ... Read Answer >>
  2. What are the pros and cons of life insurance policy loans?

    Find out the pros and cons of borrowing against your life insurance policy to help you decide if this loan type is the right ... Read Answer >>
Trading Center