Commercial loan buying down the rate by paying points?

[Nicholas Mann]

Hello All,

I am currently looking at a 5.99% interest rate on a commercial property loan for 30 years. I plan to put 30-35% down as I want to have less debt on the property and help cashflow increase. (I’m aware many investors want to put less down but I just hate having debt hanging over my head).

While speaking with my mortgage lender he advised me I could buy down the interest rate by paying points. For this particular loan I could pay $12000 approximately up front which would save me about $300 in loan payments a month. It appears I could recoup that $12000 in 32 months at the lower payment and ultimately save a lot more money for the life

Of the loan.

If I could get the interest rate to 5% and if I hold the property for 32 month or 30 years (which I intend to) am I crazy for paying $12000 to buy down the interest rate?

Any and all advice is greatly appreciated. Thank you.