1. What is the Blended Mortgage Rate?

The blended mortgage rate is a weighted average interest rate that combines two different mortgage rates based on their respective loan amounts. It's commonly used when refinancing or combining multiple mortgages.

2. How Does the Calculator Work?

The calculator uses the blended rate formula:

Where:

• \( Balance1 \) — First mortgage balance (USD)
• \( r1 \) — First mortgage rate (decimal)
• \( Balance2 \) — Second mortgage balance (USD)
• \( r2 \) — Second mortgage rate (decimal)
• \( Total\ Balance \) — Sum of both mortgage balances

Explanation: The formula calculates the weighted average of the two rates based on their respective loan amounts.

3. Importance of Blended Rate Calculation

Details: Calculating a blended rate helps borrowers understand the effective interest rate when combining multiple mortgages or refinancing existing loans.

4. Using the Calculator

Tips: Enter both mortgage balances in USD, their respective rates in decimal form (e.g., 0.05 for 5%). All values must be non-negative.

5. Frequently Asked Questions (FAQ)

Q1: When would I need to calculate a blended rate?
A: When refinancing multiple loans into one, combining mortgages, or comparing loan options with different rates and amounts.

Q2: What's the difference between blended rate and average rate?
A: A blended rate is a weighted average that accounts for different loan amounts, while a simple average treats all rates equally.

Q3: Can I use this for more than two mortgages?
A: The calculator handles two mortgages, but the formula can be extended to more by adding additional terms to the numerator and denominator.

Q4: Should I include fees in the calculation?
A: This calculator focuses on interest rates only. For a complete cost comparison, consider fees separately.

Q5: How accurate is the blended rate for payment calculations?
A: The blended rate gives an effective rate but actual payments may vary based on loan terms and amortization schedules.