A blended rate estimates the weighted average interest rate across two or more loans. Instead of simply averaging the interest rates, the calculation considers the balance of each loan so that larger loan balances have a greater effect on the combined rate.
If you have more than two loans, the same method can be extended by including each additional loan balance and rate.
A blended rate can help when comparing the combined interest rate of a first mortgage and a HELOC or second mortgage with another financing option. It can provide a simple way to understand the approximate weighted rate across multiple mortgage-related debts.
If you are comparing an existing first mortgage with a new home-equity option,
review our HELOC Loans
and Second Mortgages
guides. To estimate the payment impact of each scenario, use our
Mortgage Payment Calculator.
The blended rate is a mathematical estimate and should not be treated as an APR, loan quote, approval, or recommendation to refinance. A lower or higher blended rate by itself does not determine which financing option will cost less. Actual borrowing costs can depend on loan terms, payments, fees, closing costs, rate structure, and how long each loan is expected to remain outstanding.
