Interest rate hiked up after deposit to lock in rate paid! Advice please!

[Rahnesha White]

I paid a non-refundable $500.00 fee to lock in a 6.375 % interest rate that me and my lender both signed and then two days later my lender said they cant do that rate and then hiked up the rate to 6.875. I asked for my $500.00 back and now he is saying its non refundable. This is for a conventional loan with 25% down. The 6.375 was with 2 points and the 6.875 is with 1.5 points. I want to walk away because feel like my loan officer is untrustworthy but then I would lose my EMD of $1,000 plus all the fees Ive paid so far. I also know that a 6.875 % is still a decent rate in this market but I just feel like its kinda shady to have me pay rate lock that wasn't locked in, plus I ran my numbers at 6.375 so now at 6.875 makes my cash flow every then. Any advice/experience or any lenders think they can do better lol I only have two weeks to close now?