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Blended Rate Calculator
|The calculator computes the weighted average interest rate (commonly called the blended rate) on two or three mortgages at differing interest rates: the average rate on these mortgages is 'weighted' by their respective loan amounts.|
What is the formula for calculating the weighted average interest rate? ~ How do I compute the 'real' blended rate?
When the weighted average interest rate and the 'real' blended rate are the same?
What is the formula for calculating the weighted average interest rate?
|b1 = 1st Mortgage Balance
b2 = 2nd Mortgage Balance
b3 = 3rd Mortgage Balance
|r1 = 1st Mortgage Interest Rate
r2 = 2nd Mortgage Interest Rate
r3 = 3rd Mortgage Interest Rate
|tb = Total Balance = b1 + b2 + b3|
|Blended Rate = (r1*b1 + r2*b2 + r3*b3)/tb|
|How do I compute the 'real' blended rate?
Note: A more accurate interest cost measure over a given period would be the blended APR.
The Mortgage Professor's website has a downloadable spreadsheet that
calculates a blended APR: Blended APR Spreadsheet.