Rate-lock extension fee vs. letting the lock expire

Our mortgage is locked at 6.625% on a $420,000 loan, but the closing may be delayed about 10 days past the lock expiration date. The lender quoted a 0.25% extension fee, which would be roughly $1,050, and says the current rate is 6.875%. They also mentioned we might be able to relock at market pricing if the lock expires, but I’m still waiting for the exact relock terms.

How would you calculate the break-even point here? At 6.875%, the payment increase on the loan amount appears to be around $70 per month for principal and interest, so the extension fee could take roughly 15 months to recover, ignoring the effect of the fee on cash-to-close or APR.

I’m also trying to determine whether the extension should be waived if the delay is caused by the lender, appraisal, underwriting, or another party. Before deciding, I plan to ask for:

- The exact extension cost and whether it’s based on the loan amount or points
- The lender’s written relock rate and any relock fee
- Whether the lock has a float-down provision
- Whether the extension preserves the original loan terms and credits
- Who caused the delay and whether the lender has a policy for lender-related delays

For those who’ve dealt with this, did you compare the extension fee against the payment difference over the expected time you’ll keep the loan, or did you use a different break-even calculation?