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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?

Loan Balance Interest Rate
First Mortgage $ %
Second Mortgage $ %
Third Mortgage $ %

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?

You will need to add all interest payments on these loans over a specified period together. Then, the sum is divided by the sum of all the balances of the loans over the same period.

When the weighted average interest rate and the 'real' blended rate are the same?

A. The blended mortgage rate is equal to the average rate on two or more mortgage loans weighted by their respective loan amounts when the terms of the loans are the same (i.e. for loans of the same length).

B. The blended rate over 1 month is equal to the weighted average interest 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.
Mortgage professionals are welcome to participate!
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