Finance category
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Rate Lock Fallout Calculator
When market rates drop after a rate lock, borrowers face a tough decision: honor the lock and overpay, pay an extension fee while waiting, or 'fall out' (let lock expire and re-apply at lower rate). This calculator computes the monthly overpayment, lifetime cost, and extension fee so the right choice becomes clear.
Locked vs market rate gap %
0.63%
Monthly P&I overpayment
$208
Lifetime overpayment if held
$75,000
Extension fee per 30 days
$1,000
Recommendation
Worth fallout — re-lock
How the math works
Rate lock fallout: when market rates drop after you've locked, borrowers face a choice — stay locked (overpaying), pay extension fee while waiting for market improvement, or 'fall out' (let lock expire) and re-apply at lower rate (with re-application fees and timeline reset).
Lender lock fallout rate runs 15-25% historically. Lenders price float-down options into pricing because so many borrowers fall out anyway.
How to Use
- Enter locked loan amount and locked rate.
- Enter current market rate and days until lock expires.
- Enter extension fee per 30 days %.
- Read rate gap, monthly overpayment, lifetime cost, and recommendation.
Frequently Asked Questions
When does fallout make sense?
Generally when rate gap exceeds 0.50%. Below that, extension fee or simply staying locked is usually cheaper than re-application timeline reset.
Re-application timing?
Re-apply at lower rate adds 30-45 days for new lock + processing. If purchase contract has tight close, may not be feasible.
Lender float-down option?
Many lenders include a one-time float-down at 0.25-0.50% fee. Often cheaper than fallout. Ask your loan officer at lock time.
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