The Start/Par Price setting is available on the Manage QM Policies page of the Configuration Site. This setting is used to determine your starting adjusted rate or undiscounted rate. This value is then compared with the average prime offer rate (APOR) to determine the amount of bona fide discount points allowed to be deemed a qualified mortgage.
Click to download the Start/Par Price Examples Document which contains the content below.
Example 1: Par (zero Discount) Price Exists
|
Rate |
30 Day |
Regardless of the option selected, when a par price exists, the system always selects the associated rate. In this example, your starting adjusted or undiscounted rate would be 3.875 as shown here. |
|
3.00 |
98.500 |
|
|
3.125 |
99.375 |
|
|
3.25 |
99.750 |
|
|
3.5 |
99.875 |
|
|
3.875 |
100.00 |
|
|
4.000 |
100.125 |
Example 2: Prices Equidistant from Par
Regardless of the option selected, when there is no par and the first price greater than par is the same distance as the first price less than par, the system selects the start/par rate to be the higher (better) price so as not to force discount points.
|
Rate |
30 Day |
In this example, the system selects the rate of 3.875 priced at 100.125 because it is the same eighth difference from par as 99.875 (which would require a force discount of .125). |
|
3.00 |
98.500 |
|
|
3.125 |
99.375 |
|
|
3.25 |
99.750 |
|
|
3.5 |
99.875 |
|
|
3.875 |
100.125 |
|
|
4.000 |
100.500 |
Example 3: Higher Rates with Worse Prices Do Not Exist
If the grid has the normal pattern of prices increasing as rates increase, either naturally or by the QM option to remove higher rates with worse prices as needed for blended rate sheets, then:
|
Rate |
30 Day |
If the option Select the lowest rate with price above par is chosen, the system selects the start/par rate of 3.875 priced at 100.250 as shown in yellow because it is the lowest rate above par. When the option Select the lowest rate with price closest to par is chosen, then the system selects the start/par rate of 3.5 priced at 99.875 as shown in orange because it is closest to par. |
|
3.00 |
98.500 |
|
|
3.125 |
99.375 |
|
|
3.25 |
99.750 |
|
|
3.5 |
99.875 |
|
|
3.875 |
100.250 |
|
|
4.000 |
100.375 |
Example 4: Higher Rates with Worse Prices Exist
If the grid does not have the normal pattern of prices increasing as rates increase (possibly due to blended rate sheets), and the user has not opted to remove higher rates with worse prices in their QM policy:
|
Rate |
30 Day |
If Select the lowest rate with price above par is selected, the system chooses the start/par rate of 4.000 priced at 100.500 because 100.50 is a better/higher price than 100.125 with a lower/better interest rate as shown in yellow If Select the lowest rate with price closest to par is selected, the system chooses the start/par rate of 3.250 priced at 99.875 because 99.875 is closer to par than 99.500 as shown in orange. |
|
3.00 |
98.500 |
|
|
3.125 |
99.375 |
|
|
3.25 |
99.875 |
|
|
3.5 |
99.500 |
|
|
4.000 |
100.500 |
|
|
4.125 |
100.125 |
Example 5: No Prices Above Par; Normal Rate Sheet
Regardless of the option selected, when there is no par or prices above par, the system chooses the start/par rate of 3.375 with a price of 99.875 in yellow below because it is the closest price to par.
|
Rate |
30 Day |
|
3.00 |
98.500 |
|
3.125 |
99.375 |
|
3.25 |
99.500 |
|
3.375 |
99.875 |
Example 6: No Prices Above Par: Higher Rates with Worse Prices Exist
Regardless of the option selected, when there is no par or prices above par and higher rates with worse prices exist, the system selects the start/par rate of 3.250 with a price of 99.875 in yellow below because it is the closest price to par.
|
Rate |
30 Day |
|
3.00 |
98.500 |
|
3.125 |
99.375 |
|
3.25 |
99.875 |
|
3.375 |
99.500 |