Which Refi Loan Should I go with?

[Rachel Perl]

I hope someone can help me shed light on this since I'm not very experienced in this department and I need to figure this out asap.

I'm having a hard time making a decision on a Cash out Refi on a Rental Property that is in an LLC. I have 2 options. The loan amount will be around $577,000.

5/1 Arm 4.5%, interest only + 2 points (around $12,000)

30 year fixed rate 4.75%  no points

The payment for the fixed rate will around $1000 more per month than the 5/1 arm but it's also paying down the principal. With the fixed rate the cash flow is very low after all expenses but I don't care much about that. 

5/1 loan officer opinion - You will refi in 5 years and pull out more cash so not worth paying extra every month for principal

30 year fixed rate offer opinion - when the rates are low it's not worth doing the 5/1, rather lock in a rate and doesn't believe in paying so much in points.

I would appreciate any comments and advice from the more experienced.

Thank you!

Rachel

By doing the fixed rate I'm sort of just putting the money in savings (paying off principal) instead of having it on hand to invest further, if I need it at all.

[Jason Hirko]

@Rachel Perl ask investors who took out 5 year balloons in 2004 how well that decision worked out.