Definition
This means rolling your closing costs into your mortgage loan instead of paying them upfront. You'll pay more interest over time, but you reduce the cash needed at closing.
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Lenders allow closing cost financing for qualified borrowers. Increases loan amount reducing down payment cash. Increases interest paid over loan life. Trade-off: immediate cash vs. long-term cost. Lender requirements and limits apply. 3-6% of loan amount typical limit. No-cost/no-fee mortgages use rollover strategy. Lenders get compensation differently (yield spread premium). Popular for cash-constrained buyers. Should be considered carefully. Professional analysis determines efficiency.
Pro Tip
Calculate the long-term cost of rolled-up closing costs versus paying them upfront. Sometimes it's worth it; sometimes not.
Example
Closing costs of $8,000 were rolled into mortgage reducing cash needed at closing.