Can Refinance Closing Costs Be Rolled Into a Loan in Florida?
Yes, refinance closing costs can sometimes be rolled into a new mortgage in Florida, depending on the lender, loan program, your home’s value, and your available equity. Instead of paying all the costs upfront, eligible expenses may be added to the new loan balance.
This can be useful if you want to refinance but don’t want to use several thousand dollars of savings at closing. However, there is an important tradeoff: you’re borrowing more money, so you’ll generally pay interest on the additional amount over time.
What Does It Mean to Roll Closing Costs Into a Loan?
Imagine you currently owe $300,000 on your Florida home and your refinance has $8,000 in eligible closing costs.
If the lender allows those costs to be financed, the simplified numbers could look like:
Existing mortgage: $300,000
Closing costs: $8,000
New loan: $308,000
Rather than paying the $8,000 separately, the amount is incorporated into the new mortgage.
Your actual figures will depend on the refinance transaction and the costs that are eligible to be financed.
Does Rolling Costs Mean the Refinance Is Free?
No.
This is probably the most important thing to understand.
Rolling closing costs into your mortgage doesn’t eliminate them. It simply changes how you pay for them.
If you add $8,000 to your mortgage, you’ll owe that additional $8,000 and may pay interest on it for years.
A lender could also offer a lender credit instead. With a lender credit, the lender pays some closing costs in exchange for different loan pricing, which can include a higher interest rate.
So don’t compare refinance offers based only on how much cash you need at closing.
What Closing Costs Can Be Rolled Into the Mortgage?
Depending on your loan and lender, eligible expenses may include things such as:
- Lender fees
- Origination charges
- Appraisal costs
- Title services
- Recording charges
- Certain prepaid expenses
- Other allowable closing costs
Not every charge can necessarily be financed in every refinance.
Your lender should provide a Loan Estimate showing the estimated costs and loan terms so you can understand how the transaction is structured.
Florida Mortgage Taxes Need Attention
Florida has specific taxes connected with mortgage documents.
The Florida Department of Revenue states that mortgages, liens, and other evidence of indebtedness are subject to documentary stamp tax when recorded. The rate is $0.35 per $100 of the amount secured by the mortgage, with no cap on the tax for mortgages.
Because these charges can be based on the amount secured, increasing the new loan balance can affect the costs associated with the transaction. Your lender or closing/title professional should calculate the applicable taxes for your specific refinance.
Can You Roll Closing Costs Into a Cash-Out Refinance?
Potentially.
With a cash-out refinance, you replace your existing mortgage with a larger loan and receive some of your home equity as cash, subject to lender and loan-program requirements.
For example:
Home value: $500,000
Existing mortgage: $250,000
New mortgage: $280,000
The difference doesn’t necessarily mean you’ll receive the full $30,000 as cash. Closing costs and other transaction expenses can reduce the amount you actually receive.
Does Adding Closing Costs Increase Your Monthly Payment?
It can.
Suppose your new mortgage would otherwise be $300,000. If you add $8,000 in costs, you’re borrowing $308,000 instead.
The monthly payment increase may not seem dramatic, but you’re also paying interest on the additional balance.
That’s why it’s worth comparing:
Paying costs upfront
vs.
Financing the costs
The better choice depends on your cash reserves, interest rate, loan term, and how long you expect to keep the mortgage.
What About a “No-Closing-Cost” Refinance?
A no-closing-cost refinance doesn’t necessarily mean there are no costs.
Generally, the expenses are handled another way. For example, a lender may provide credits toward closing costs in exchange for a higher interest rate, or costs may be added to the mortgage balance.
So if a lender tells you that you can refinance with no money upfront, ask:
“What is my interest rate, and what will the total loan cost be?”
That answer is much more useful than simply knowing how much you’ll pay at closing.
When Can Rolling Costs Make Sense?
Financing closing costs may be worth considering if:
- You want to preserve your emergency savings.
- You don’t have enough cash available for closing.
- The refinance provides meaningful monthly savings.
- You expect to stay in the home for several years.
- Adding the costs doesn’t create an unfavorable loan-to-value ratio.
- The long-term savings outweigh the additional interest.
On the other hand, paying the costs upfront may be better if you have sufficient savings and want to keep your mortgage balance as low as possible.
Calculate Your Break-Even Point
Before refinancing, calculate how long it will take for your savings to recover the cost of refinancing.
For example:
Closing costs: $9,000
Monthly savings: $300
$9,000 ÷ $300 = 30 months
That’s a basic break-even period of about 2½ years.
If you’re planning to stay in the home for only one year, the refinance may not make much sense. If you expect to keep the mortgage for many years, the calculation could look considerably more favorable.
If you’re financing the closing costs, remember that the additional interest should also be considered.
Compare Two Loan Options
When talking to lenders, ask them to show you two versions of the refinance:
Option 1: Pay Closing Costs Upfront
- Lower loan balance
- Potentially lower monthly payment
- More cash required at closing
- Less interest paid on the closing costs
Option 2: Finance Closing Costs
- Less cash needed upfront
- Higher loan balance
- Potentially higher monthly payment
- Additional interest over time
Seeing the two options side by side makes the decision much easier.
Frequently Asked Questions
Can refinance closing costs be rolled into a mortgage in Florida?
Yes, in many situations eligible closing costs can be financed into the new mortgage, but the amount allowed depends on the lender, loan program, property value, and other requirements.
Does rolling closing costs into the loan increase the mortgage balance?
Yes. If you finance $7,000 of eligible costs, for example, your new loan balance can be approximately $7,000 higher than it would otherwise be.
Is it better to pay refinance costs upfront?
Not necessarily. Paying upfront keeps the loan balance lower, but financing the costs can help you preserve cash. Compare the total cost of both options before deciding.
Can a lender cover my refinance closing costs?
A lender may offer credits toward closing costs. However, those credits can come with different loan pricing or a higher interest rate, so compare the overall cost.
Final Thoughts
So, can refinance closing costs be rolled into a loan in Florida? In many cases, yes.
But rolling the costs into your mortgage doesn’t make them disappear. It simply allows you to pay them over time, along with interest.
Before choosing this option, ask your lender for a detailed Loan Estimate and compare the refinance with and without the costs financed. Look at the new loan balance, interest rate, monthly payment, cash required at closing, and total interest.
That way, you can choose the option that makes the most sense for your Florida home rather than simply choosing the one that requires the least cash today.
