Help me understand LLPAs on an investment property

[Anita Smith]

Hi! I'm brand new to the community. I'm looking to buy an investment property. The rate has been quoted at 4.75%, with 2.55 discount points, and I'm paying 20% down. But the 2.55 discount points? Ouch. I asked if I could waive paying discount points in exchange for a higher rate, because the break-even point for me is 6 years for that, and I will very likely refinance before then, so it feels like lighting over 5k on fire to me. 

They say that isn't possible to do that because it's federally regulated, and directed me to look up the LLPA tables. Sure, all fine and well. But the tables still don't answer the question as to whether it legally HAS to be taken as discount points at closing, or if it can be applied to the base rate. But I always thought you could ask to pay no or less discount points in exchange for the higher rate, I mean, what is the difference to the bank, really?

At 4.75% it's already a higher rate, because it's an investment property...so aren't those also LLPAs being calculated into that base rate? I'm quite confused on this and any help would be much appreciated.

All together it makes the closing costs come in at over 10k. Wow, to think I was naive in thinking it would be around 5k to close the loan...