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Builder Rate Lock Calculator
New-construction buyers face a timing problem: rates can move significantly during 6-12 months of construction. Builder forward rate locks (often through builder's preferred lender) lock today's rate for closing months later. Buyers pay through a lock fee or higher home price. This calculator computes net savings — fee subtracted from gross savings.
Often passed back as price increase
Net lifetime savings
$128,145
Monthly P&I savings
$375
Gross lifetime savings
$134,895
Builder rate lock fee
$6,750
How the math works
Builder rate locks (forward commitment) let buyers lock today's rate before construction completion — typically 6-12 months out. Builder absorbs market risk through their preferred lender. Often paid for via a 1-3% price increase or upfront fee.
In rising-rate environments, builder locks save buyers $50-300/mo on a typical mortgage. In flat or falling environments, the locked rate may exceed market — fee becomes pure cost.
How to Use
- Enter loan amount, locked rate, and projected market rate at closing.
- Enter builder rate lock fee % (often 1-3%).
- Enter loan term.
- Read net lifetime savings (positive = lock is worth it).
Frequently Asked Questions
When does a lock pay off?
When market rates at closing are 0.50-0.75% above the locked rate, the fee is recovered. Larger spreads make locks very valuable; smaller or inverse spreads turn fee into pure cost.
Float-down option?
Some builder locks include a one-time float-down — if market rates drop, you can re-lock at lower rate (sometimes for additional fee). Negotiate at lock signing.
Builder credit vs cash to close?
Some builders give a closing credit equivalent to the lock fee, effectively making the lock 'free' to the buyer in exchange for using preferred lender. Compare loan terms carefully.
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