What's Weight Got To Do With It?

Living with a teenager is a learning experience.
If you are a parent you know what I'm talking about.

The latest happenings in the Mueller household is that my 13 yr. old daughter has discovered the sense of smell.
Ok, maybe it's more that she has discovered the stores in the mall that sell smelly lotions, bath beads, soaps, shampoos and conditioners.
We now have a bathroom fully stocked with smelly stuff.

In the mood for

• Passion Fruit / Banana?
• Guava / Cranberry?
• Green Apple / Hibiscus?

I'm sure we have it stocked in both Shampoo and Conditioner.

Which brings up a question - does the shampoo have to match the conditioner?
What if they clash? Dill Pickle Shampoo and Milk Conditioner?

I digress, back to the point.
While my precious daughter is consumed with one aspect, in this case how a product smells, she is also neglecting all other aspects.
I say this because I've noticed her hair looking less shiny, less clean, less bouncy lately.

How does this relate to mortgages?
Many times I talk to clients who are keyed into one aspect, (or two) of a loan.
Most times it's, "What's the Rate?"
Other times, "How much is this going to cost me?"
Or the extremely deadly, "What is my payment going to be?"

Like my teenager - they are blindly focusing on one part of the loan and not the big picture.

Let me say this.
If you were to focus on only one particular aspect of your loan...
There is one feature that I would rather you spent all your waking moments on rather than any other.
Want to know what that is?

The Weighted Average Cost of Capital.
Chances are this is something you've never heard of - right?
You see, Weight has everything to do with making the right choices!

WACC generally is talked about in conjunction to corporations and investing but when applied to home ownership it is an invaluable tool.
Only by determining the weighted average can see how much real interest the borrower has to pay for every dollar they finance.

In any purchase or refinance transaction -
Ask your mortgage professional about the WACC.
If they don't know (and you'll be surprised how many do not), maybe you should be working with someone who does?