30 yr Fixed or 5 yr balloon amortized over 15 years??

[Martin Warren]

Just looking for some advice.  An offer has been accepted on my first rental house.  Closing costs were much more than I was expecting (and what was originally quoted for me) on a fixed 30 year mortgage so now I am exploring another option.  Here are the details:

Option 1:

Purchase price:  $37,000

Down payment: $7,400

Closing costs with 30 year mortgage: $2743 plus $987 pre paid costs due at closing (tried to negotiate some of the origination fees but the bank wouldn't budge one penny)

Monthly payment with 30 year:  $272.72

Interest rate:  4.5%

Option 2:

5 year balloon amortized over 15 years

Same purchase price and down payment

Closing costs:  $1527 with no escrow so no pre-paid costs up front

Monthly payment:  $327 (including insurance and taxes that will be paid separately)

Interest rate:  4.75%

The bank only charges a $350 renewal fee at the end of the 5 years

Monthly rent after management will be between 585 and 630. 

I know this is not a ton of info on the deal but hopefully someone can weigh in.  I am at work and had to type this up quickly. 

I want to buy another home this year and the $2200 difference in closing costs will help me to do that sooner.  I understand the cash flow will not be as great and that's what I'm weighing.  Seems to me that saving that $2200 up front would make up for years of the difference in cash flow.  Opinions?