Mortgage Par Rate

See: Mortgage.

You apply for a mortgage. The bank sticks all your pertinent information (credit score, current bank account balances, shoe size, dating history) into their algorithm. It spits out your mortgage par rate. This figure represents the general rate you qualify for.

Think of "par" in the golf sense. If you’re a regular golfer (regular professional, quality golfer, that is...our annual employee golf outings here at Shmoop are known as "Bogey Fest," or really, "Quad Fest" if we're being real), the par score represents what you should be able to shoot on that hole. Par four means you should get in the hole in four strokes, etc.

In a similar way, the mortgage par rate represents the interest rate someone of your credit quality should pay, based on current market rates. It isn’t necessarily the rate you’ll pay, however. The figure provides the benchmark used to calculate your final rate. The bank might still raise or lower the rate based on the situation...leading to the adjusted par rate.

See: Adjustable-Rate Mortgage (ARM).