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).
Related or Semi-related Video
Finance: What is a second mortgage?4 Views
Finance allah shmoop What is a second mortgage Okay you
know what a first mortgages it's otherwise cleverly named what
is called it is called oh yeah Mortgage it's Just
a loan on a house You paid four hundred grand
for this baby Hundred grand down two hundred fifty grand
in a first mortgage And they're still fifty grand You
owe well where's that fifty large coming from the bank
wouldn't loan you any more on a first mortgage that
was costing you six percent a year Tio you know
to rent that money So you had to get a
second mortgage which should things go awry and you become
a statistic Well that's it's fully behind the first mortgage
in the priority stack of payback So in a bankruptcy
situation the first mortgage first what's called a first mortgage
get it fully paid along with any fees associated with
it and back interest accrued and any other things that
are associated with that first mortgage it stands in line
first in priority Then any cash leftover gets attributed to
that second mortgage So not surprisingly second mortgage money costs
a lot more to rent then first mortgage money because
the risk of non payment in a bad situation is
meaningful E higher especially when the borrowed does this for 00:01:25.136 --> [endTime] a living
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