Lender changes rate after appraisal??

[Shirley X.]

Advice needed from BPers!!!

We are in the process of closing our first MF with a conventional loan. The locked interest rate was 3.75% for 30 yrs. One week after the executed P&S was submitted to lender, and following the appraisal, the lender told us

"Since the home is a considered a 2 unit multifamily home the interest rate changes to 4.125% with 4.147 APR. When we moved forward originally it was based on a single family home."

Is it common that lenders have different rate for MF vs. SFH? Is this legitimate to happen at this stage? (they received the P&S a week ago, and received the executed offer even earlier, with minimum looking, they would be able to find out the property type. The loan officer said he thought we were buying one unit of the MF...)

What is the best option in this scenario? We have a short closing date as we have to be on international travelling shortly after the closing. 

Any thoughts and opinions will be appreciated!