They want to charge $450/month on top of the house payment.
We're borrowing $155,000 and they want to tack $458 to the monthly payment, making the payment $1778/month. If we borrow$175k, the payment goes up to $1991/month.

He says we'll be paying so much in insurance because our credit is less than stellar. The interest rate is 7.625%.

Should we look elsewhere?????

i need more info than what you have provided

Do you mean pmi insurance? The way to beat this is to put 20 % down, in which case this insurance is not necessary.