Rate Lock Extension Fee Calculator

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Rate Lock Extension Fee Calculator

Typical range: 1 to 3 basis points (0.01% to 0.03%) per day.

Estimated Total Cost $0.00

Loan Percentage: 0%

Cost per Day: $0.00

function calculateExtensionFee() { var loanAmount = parseFloat(document.getElementById('loanPrincipal').value); var days = parseFloat(document.getElementById('extensionDuration').value); var bps = parseFloat(document.getElementById('bpsPerDay').value); var outputDiv = document.getElementById('extensionOutput'); if (isNaN(loanAmount) || isNaN(days) || isNaN(bps) || loanAmount <= 0 || days <= 0 || bps < 0) { alert("Please enter valid positive numbers for all fields."); return; } // Calculation logic // 1 Basis Point = 0.0001 (1/100 of 1%) var totalBps = days * bps; var percentageOfLoan = totalBps / 10000; var totalFee = loanAmount * percentageOfLoan; var dailyCost = (loanAmount * (bps / 10000)); // Displaying Results document.getElementById('finalFeeDisplay').innerText = "$" + totalFee.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('percentDisplay').innerText = (percentageOfLoan * 100).toFixed(4) + "%"; document.getElementById('dailyCostDisplay').innerText = "$" + dailyCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); outputDiv.style.display = 'block'; }

Understanding Mortgage Rate Lock Extension Fees

A rate lock agreement guarantees that a lender will provide a specific interest rate for a set period, usually 30, 45, or 60 days. However, real estate transactions often encounter unexpected delays—ranging from title issues to slow appraisals. When your rate lock is about to expire before your loan closes, you may need to pay a Rate Lock Extension Fee to keep that interest rate active.

How Extension Fees are Calculated

Lenders typically charge extension fees based on two primary factors: the loan amount and the number of days needed for the extension. Most lenders price these extensions in Basis Points (BPS).

  • Basis Point: 1/100th of 1 percent (0.01%).
  • Daily Rate: Lenders often charge between 1 and 3 basis points per day of extension.
  • Formula: Loan Amount × (Daily Basis Points / 10,000) × Number of Days.

Real-World Example

Suppose you are closing on a $400,000 mortgage. Your rate lock expires in two days, but the inspection repairs won't be completed for another two weeks. You request a 15-day extension. If your lender charges 2 basis points per day:

  1. Total Basis Points: 15 days × 2 BPS = 30 BPS.
  2. Percentage: 30 / 10,000 = 0.003 (or 0.30%).
  3. Total Cost: $400,000 × 0.003 = $1,200.

When Should You Pay for an Extension?

Deciding whether to pay the fee depends on the current market environment. If market interest rates have risen significantly since you locked your rate, paying a $1,000 extension fee might save you tens of thousands of dollars in interest over the life of the loan. Conversely, if market rates have dropped, it might be more beneficial to let the lock expire and "re-lock" at the new, lower rate (though lenders often have policies against this to prevent "rate jumping").

Pro Tip: Always ask your loan officer who is responsible for the delay. If the lender caused the delay due to internal processing errors, they might waive the extension fee entirely.

Common Causes for Extensions

While some delays are unavoidable, knowing the common culprits can help you manage your timeline better:

  • Appraisal Delays: High volume in the market can lead to weeks of waiting for a certified appraiser.
  • Document Verification: Missing tax transcripts or unresolved issues in credit reports.
  • Title Issues: Unforeseen liens or ownership disputes discovered during the title search.
  • Contingency Failures: The buyer's current home sale falling through or delayed repairs.

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