Help me pick between two choice for terms on my upcoming purchase

[Eric Hathway]

I am buying an 11 unit apartment building with a commercial mortgage and have the two following financing options:

 (Both are 20% down, amortizing over 20 years). Purchase price $640,000

A)    4.25%, adjusting every 5 years

or

B)    4.625%, fixed for the first 7, then adjusts every 5 years

Please briefly explain your choice and thank you in advance!!

[Jeremy Pace]

@Eric Hathway

All other things being equal, go for the 7 year rate lock. It gets your LTV to 60% before you have to refinance (assuming cash down-payment) and you don't know what will happen in 5-7 ... interest rates could be crazy high by then, we don't know.

This gives you an 84 month window to work on your next refi (or your exit).  If the $100/mo is going to tip the scales on whether or not this deal makes money, you should probably not buy it ;)