Blended interest rates take the total of two mortgages over a set period of time.Blended rates are a weighted average of two mortgages.
Blended rates are usually calcualted with a first mortgage and a second mortgage on the same property. It is usually cheaper to take a first mortgage and a second mortgage when applying for a high loan-to-value loan than to just take a single loan against the property. By blending the rate you are able to see which gives you the lowest interest rate and hence the lowest monhthly payment.
To calculate the blended rate on a first and second mortgage, take the first mortgage amount times its interest rate and add the second mortgage amount times its interest rate. Divide that sum by the total mortgage amount (first + second).
Knowing your blended rate will help you greatly when comparing combo loan offers from different lenders. If you have trouble calculating your blended rate just ask your mortgage broker what it is, they should be happy to supply you with the information.
There have been important changes regarding the tax deductibility of private mortgage insurance which make comparing the blended rate of a combo loan with the interest rate of a single loan easier than ever before. Contact us at 954-475-8787 for more information.
With the combo loans becoming so popular over the last few years there are many blended rate calculators available online, but it will probably be much easier just to ask your mortgage broker/loan officer what your blended rate is instead of doing a search to find one of these calculators. Knowing your blended rate will make it much easier to compare loans between different lenders offering the same types of financing and it will also help you to compare different loan options between the same and different lenders.
Usually a combo loan will give you a combined lower monthly payment than a "blended rate" loan.
