I Asked a Mortgage Broker: The One Rate They'd Never Accept in 2026
A mortgage rate substantially higher than comparable offers is a red flag. Even the lowest rate can be a bad deal if you have to pay thousands of dollars upfront to get it.
Freddie Mac reported that the average rate on a 30-year fixed-rate mortgage was 7.03% as of Sept. 30. When MoneyLion asked Kelly Sansom, mortgage broker with ClearPath Utah, which rate he would reject, he did not name 7%, 8% or another numerical cutoff.
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“The rate I’d reject could be the lowest one offered,” Sansom said. “If buying it down takes more than six years to recover the upfront cost, counting payment savings and additional principal paid down, I recommend against it.” Here's why rejecting the lowest rate may make the most sense.
Why a Lower Rate Can Cost More
Discount points are optional fees paid to a mortgage lender at closing in exchange for a lower interest rate and monthly payment. One point costs 1% of the loan amount, according to the Consumer Financial Protection Bureau (CFPB). For example, one point on a $400,000 mortgage costs $4,000.
Freddie Mac said one point may lower the interest rate by about 0.25 percentage points. That could reduce a rate from 6.75% to 6.5%, although the actual reduction varies by lender.
According to the CFPB, borrowers can roughly estimate the break-even point by dividing the cost of the discount points by the monthly savings. For example, if a borrower pays $4,000 in points and saves $100 per month, it would take 40 months to recover the upfront cost. Selling or refinancing before then would mean the monthly savings did not cover the full $4,000. Sansom said borrowers often move, refinance or otherwise change mortgages within six to eight years.
Paying $20,800 Upfront Would Have Left Them Just $85 Ahead
Sansom recalled working with an attorney who repeatedly asked for the lowest available rate. He and his wife expected to move within four to five years.
Reducing their rate from 6.75% to 6.25% would have required them to pay $20,800 upfront in discount points. Their mortgage payment would have been about $342 lower per month.
Because the couple expected to move in as little as four years, Sansom compared the costs at the four-year mark. By then, the lower rate would have reduced their monthly payments by a total of $16,416. That would still leave them $4,384 short of recovering the $20,800 they would have paid upfront. After including the additional equity from paying down more principal, Sansom estimated that the couple would be ahead by only about $85.
He recommended keeping the $20,800 available for unexpected expenses in the new home. Once the buyer saw the numbers, he accepted Sansom’s recommendation.
“A low rate can make buyers feel like they won,” Sansom said. “But I want them to understand what they paid for that win.”
How To Compare Mortgage Offers
Request Loan Estimates from multiple lenders for the same loan amount, loan type, term and number of points. Gregg Harris, founder and CEO of LenderCity, has worked as a mortgage broker for 30 years.
“The high rate would be a rate higher than the next best competitor,” Harris said. “So shopping rates and fees is paramount to getting a better rate.”
A higher-than-average rate may be justified by the borrower’s credit score or the need for an unconventional loan, Harris said.
The CFPB recommended comparing the interest rate, monthly payment, mortgage insurance and upfront loan costs on each Loan Estimate. Borrowers should also review the annual percentage rate (APR), which includes the interest rate, points, mortgage broker fees and certain other charges.
The Bottom Line
The mortgage rate to reject is not necessarily the highest one. Even the lowest rate can be a bad deal if you sell or refinance before the monthly savings recover what you paid upfront to get it. Compare each offer based on its total cost and how long you expect to keep the mortgage, not just the advertised rate.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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