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If I roll up my closing costs in the loan, will I end up paying interest on those fees?

by EElric from Englishtown, New Jersey. Jan 25th 2013 Reply


William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,588 contributions

Well yes.. since your interest is calculated on your loan balance, and the costs are a part of your loan balance, then of course you pay interest on those fees.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Jan 25th 2013
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Bert Carpenter (BertCarpenter)
#38 ranked lender in Arizona - 1,821 contributions

Of course. Since the bank is advancing the funds to pay those fees, rather than you pulling the money out of your own bank account, the bank is going to expect to collect interest on all it advanced, regardless of what the money was for. The banks didn't get so rich by lending money for free! ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

Jan 25th 2013
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Steven Ceceri (CreativeFinancingOptionsGroup)
#36 ranked lender in Massachusetts - 723 contributions

Good Evening! You should always analyze the cost to benefit of having closing costs added onto your existing loan to create a new, higher loan amount, versus paying those closing costs out of pocket. I show clients the difference between the two and let them decide, but it seems you may not have had this discussion with any loan officer based on the question you asked. Also, there are some programs that offer "lender credits" which can help cover the closing cost as well without increasing the loan amount as much as not having a lender credit at all. Our Branch Office is in NJ, but we are a Direct Nationwide Lender and I would be happy to talk to you more if you'd like. See my profile page for more details! Enjoy the evening!

Jan 25th 2013
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Barb Lanis (BarbLanis)
#70 ranked lender in Illinois - 663 contributions

Yes, you will pay interest on the total loan amount. However, assuming you are saving quite a bit overall on the new loan, the interest cost on closing costs rolled into the loan would be a drop in the overall bucket.

Jan 25th 2013
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Edgar Aranda (earanda)
#756 ranked lender in California - 93 contributions

The simple answer is yes. A great rule of thumb to consider is the amount of money that you will save per month and how long will it take you recover that total cost. The maximum number of months to recover those cost is 36 months. If it takes longer than that It may be a high cost loan.

Jan 25th 2013
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Kofi Akpabla (KofiAkpabla)
#22 ranked lender in Connecticut - 37 contributions

Yes. You pay interest on the total loan amount. The loan amount will be higher because you are including the closing costs. If you are looking for a low rate and great service, feel free and contact me. 203-708-0001. I lend in NJ.

Jan 25th 2013
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Peter Botros (PeterBotros)
#71 ranked lender in New York - 895 contributions

You will pay interest on the dollar amount financed. If you increase your dollar amount financed by including your closing costs, then yes you will pay interest on those fees. We are a Direct Lender here in NJ. I would be happy to offer you a free consultation and rate quote. It will only take about 5 minutes. Call or Email me, Peter Botros, 908 933 0253 office 347 231 4444 cell PBotros@OmegaLoans.net

Jan 25th 2013
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Leonard Volodarsky (nyfha@yahoo.com)
#56 ranked lender in New York - 14 contributions

Yes, Eric,Typical refinance, your closing costs rolled into your new and hopefully lower rate loan.Of course, interest is calculated based on the total, amount of pay off and closing costs.If your new loan has economic benefits, i.e. lower rate and of course lower monthly payment, you should be able to recoup closing costs in a short period of time and save money, going forward.Also, if reduction of monthly payment is accomplish, your total interest charges for the life of the loan should be substantially lessAny questions, don't hesitate

Jan 25th 2013
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Dave Pressel (DavePressel)
#93 ranked lender in New Jersey - 12 contributions

Interest is paid on all borrowed funds (included your closing costs if rolled into the loan)Dave PresselWest Town Savings Bank732-348-5397

Jan 25th 2013
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Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#76 ranked lender in Florida - 2,240 contributions

Absolutely, because you are adding money to your principle balance. if you are thinking about refinancing and would like to know all the options available to you feel free to email or call us at 201-962-3555 or Team@BestMortgageOption.com. We will go over the many refinancing options available to see what the Best Mortgage Option for you is!

Jan 25th 2013
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Andrew Alfonso (CashCow)
#43 ranked lender in Florida - 271 contributions

Yes. You pay interest on the total loan amount. The loan amount will be higher because you are including the closing costs. If you are looking for a low rate and great service, feel free and contact me. Andrew Alfonso 800 813 3291

Jan 25th 2013
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Jerry Potter (JerryPotter)
#81 ranked lender in Washington - 37 contributions

You certainly do. Financing your closing cost by rolling them into the new loan amount may not be the cheapest option, but it allows you to keep from depleting any savings or emergency fund you have worked hard to accumulate. In most cases, consult your lender and loan terms, you can pay down on your loans principle balance without penalty. So, if you do roll the closing cost into your new loan, think about paying extra money toward your principle balance in chunks, when you're more finacially ready. This will help reduce the interest accruing on those closing cost. Another option to help reduce the interest you pay on your mortgage is a Bi-Weekly Mortgage Payment Schedule. This will also put you on a fast track to paying your mortgage off sooner. Something you may want to consider.JP - WA & OR 253.631.2212

Jan 25th 2013
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Manuel Gonzalez (mmortgage1)
#91 ranked lender in New Jersey - 89 contributions

Yes that is part of the amount financed, which affects your APR. Good LuckMG

Jan 25th 2013
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Doug Grover (DougGrover)
#31 ranked lender in Nevada - 1 contribution

Yes ,you will pay interest on the closing costs that are rolled into the loan. If you have enough closing costs saved up somewhere to use as closing costs that would be best and most cost effective. Assuming the closing cost are in the average range of most banks and brokers and how much your loan amount is. The 3,000-4,000 of closing costs rolled into the loan will change the monthly payment by increaseing it by no more than 25.00 per month. Not a whole lot

Jan 25th 2013
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Steve Azarch (sazarch)
#18 ranked lender in Tennessee - 93 contributions

Yes, you will pay interest on the total amount financed. The interest that you paying is not that much on the closing cost that you roll into the loan.

Jan 25th 2013
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,875 contributions

YES, you sure will. Sit down with a local Licensed Loan Officer (not at a bank). They can show you many different rate and closing costs options, including rolling the costs into the new loan - which is the most popular options. Depending on many factors, together you can decide which options makes the best sense for you.

Jan 26th 2013
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