1. What is a Par Rate Calculator?

Definition: This calculator determines the mortgage par rate by subtracting adjustments from the base interest rate.

Purpose: It helps borrowers and lenders determine the actual interest rate without points or other rate adjustments.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• Par Rate — The actual mortgage interest rate (%)
• Base Rate — The starting interest rate (%)
• Adjustments — Any percentage deductions from the base rate

Explanation: The base rate is adjusted downward by any applicable percentage adjustments to determine the par rate.

3. Importance of Par Rate Calculation

Details: Accurate par rate calculation helps borrowers understand their true mortgage costs and compare loan offers effectively.

4. Using the Calculator

Tips: Enter the base interest rate and any percentage adjustments. The calculator will show the resulting par rate.

5. Frequently Asked Questions (FAQ)

Q1: What is a base rate?
A: The base rate is the starting interest rate before any adjustments or points are applied.

Q2: What are typical adjustments?
A: Adjustments can include lender credits, relationship discounts, or other rate reductions.

Q3: Is par rate the same as APR?
A: No, par rate is the base interest rate, while APR includes additional loan costs.

Q4: Can adjustments be positive?
A: Typically no, as adjustments would increase the rate (points), which would be handled differently.

Q5: How precise should the inputs be?
A: Enter rates to at least two decimal places (e.g., 4.125%) for mortgage accuracy.