Definition
Par rate is the baseline interest rate without points or lender credits. It helps you compare loan scenarios fairly—offering 5.75% (1 point paid) versus 6.25% (lender credit) both reference par. Understanding par helps you evaluate trade-offs.
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The par rate is the baseline interest rate before any points or lender credits are applied. It helps borrowers understand the true cost of different loan scenarios. Lenders may offer a higher rate with credits (negative points) or a lower rate with costs (discount points) relative to par.
Pro Tip
Understanding par rate helps you compare loan offers on a level playing field, regardless of points or credits.
Example
If the par rate is 6.0%, a lender might offer 5.75% (requiring 1 point) or 6.25% (with $2,000 credit) for comparison shopping.