1. What Is The Weighted Average Mortgage Interest Rate?

The Weighted Average Interest Rate (WAIR) calculates the average interest rate across multiple mortgages, weighted by their respective principal amounts. This provides a more accurate representation of your overall borrowing costs than a simple average.

2. How Does The Calculator Work?

The calculator uses the WAIR formula:

Where:

• \( P_i \) — Principal amount of each mortgage
• \( r_i \) — Interest rate of each mortgage (as decimal)
• \( \sum \) — Summation of all mortgage values

Explanation: The formula calculates the proportion of each mortgage's interest cost relative to the total principal, providing an accurate weighted average.

3. Importance Of WAIR Calculation

Details: Calculating WAIR helps borrowers understand their true cost of borrowing across multiple mortgages, compare refinancing options, and make informed financial decisions about debt consolidation or restructuring.

4. Using The Calculator

Tips: Enter the principal amount and interest rate (as decimal) for each mortgage. You can calculate for 1-3 mortgages. Leave unused fields empty. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why use weighted average instead of simple average?
A: Weighted average accounts for the different sizes of mortgage principals, giving larger mortgages appropriate influence on the overall rate.

Q2: How should I input interest rates?
A: Enter rates as decimals (e.g., 4.5% = 0.045). The calculator will display the result as a percentage.

Q3: Can I calculate for more than 3 mortgages?
A: This calculator supports up to 3 mortgages. For more complex calculations, consider using spreadsheet software.

Q4: Does this include other loan costs?
A: No, WAIR only calculates the weighted average of interest rates. It does not include fees, points, or other loan costs.

Q5: How accurate is this for refinancing decisions?
A: WAIR provides a good baseline for comparing current borrowing costs with potential refinancing options, but should be considered alongside other factors like closing costs and loan terms.