Lowest Rate ≠ Lowest Payment: The Hidden Cost Most Borrowers Miss

Everyone wants the lowest interest rate. That’s natural — it’s what mortgage ads talk about. But lowest rate doesn’t always mean lowest payment.

Here’s a secret the industry doesn’t advertise: Mortgage insurance can add 1% or more to your actual rate.

The Problem with “Rate Shopping”

When borrowers ask “What’s your rate?”, they’re thinking about the note rate. But there’s another cost hiding in plain sight:

Private Mortgage Insurance (PMI)

• Required on conventional loans with less than 20% down
• Required on FHA loans (upfront + monthly)
• Can range from 0.5% to 2%+ of your loan amount annually

Real Example: Conventional vs. Non-QM

Let’s say you’re buying a $350,000 home with 10% down:

The Non-QM loan saves you $165/month — despite the higher rate.

Why This Matters

• PMI is not temporary — It stays until you hit 20% equity
• FHA is worse — Upfront MIP (1.75%) + monthly MIP
• Credit scores under 720 — PMI starts climbing steeply
• Rate ads are misleading — They rarely mention PMI

When Non-QM Makes Sense

Consider non-QM if:

• ✅ Credit is 620-740 (higher PMI zone)
• ✅ You have cash flow but complex income
• ✅ You want to avoid mortgage insurance entirely
• ✅ You plan to refinance in 3-5 years
• ✅ You’re an investor with rental properties

The Real Question to Ask

Don’t ask: “What’s your rate?”

Ask: “What’s my total monthly payment, including all fees and insurance?”

That’s the number that matters. And sometimes, a slightly higher rate with no PMI beats a lower rate with expensive mortgage insurance.

Get the Real Picture

Before you rate-shop, get a full analysis. We’ll look at your complete financial picture and find the loan with the lowest total payment — not just the lowest rate.

Get Pre-Qualified →