Pay of HERO loan or let it ride on the tax bill?

[Bryant Brislin]

I'm in escrow to buy a property where the seller used a HERO loan to put energy efficient windows on the house. The amount of the loan is about 10k which he has amortized for a few years on his tax bill, where he is paying approx 1k a year until it is paid off. For LTV purposes, my bank wants me to pay down about half the HERO loan. If I pay off the entire bill then I'll get a lower interest rate in the higher 4% range. If I leave the remaining 5k on the tax bill, then the bank wants a higher interest rate in the lower 5% range. The payment increase for the higher Int rate is tiny since I'm buying a 112k home. I'm probably going to be putting 5-10k of rehab into the home (it's a fixer), plus with closing costs, inspections, 20% down, I'm already bringing a lot of cash to the table. Any thoughts if I should take the plunge and pay the extra 5k to get the lower interest rate? Or is there a benefit to essentially having an interest-fee loan that I can pay off over time?