What “rolling fees in” really means when you refinance


When I first refinanced, my loan officer said that I didn’t pay any fees, because he was “rolling them in”. Sounds great, right? Here’s a tip: there are always fees.

What “rolling fees in” means is that the $8,000 fee I paid got added to the loan amount. I paid no upfront fees, but my loan amount for my new mortgage was $8,000 more.

Does this sound like no fees to you?

Another misleading aspect of refinancing is around the concept of breakeven. For example, if I paid $8,000 in fees, but I saved $500 a month by refinancing, the break even would be $8,000/$500 = 16 months.

But that an accurate math problem at all. 95 percent of people who refinance roll the fees into the loan amount, which makes the breakeven math problem above totally inaccurate.


Here’s an video explanation of why breakeven is wrong:


This video illustrates that refinancing a little more complicated than calculating breakeven, and why should should never rely on break even calculations at all.

But, refinancing doesn’t have to be hard. No! In fact, it’s something that you can decide on without having to rely on a loan officer at all in your decision making.

I wrote Avoid the Money Pit, Turn Your Home Into a Financial Powerhouse to give homeowners a straightforward, unbiased resource for homeownership that is packed with information and tools for people who are refinancing. It’s 100% independent, not associated with any bank or mortgage company so there’s no financial incentive to sell you anything at all.

Are you considering refinancing? If so, read about our book and get the information you need to make decisions about trade offs, without having to go to a bank first.