The lowest rate isn't always the lowest total cost. Origination points, closing fees, and your actual hold period can flip the winner. Compare up to 3 offers on total cost of capital, not just the headline rate.
At a 5-year hold, Option B costs $747 less than A and $3,413 less than C. The 2 origination points on B get paid back by the lower rate over time — but only if you hold long enough.
Origination points pay off over time. Paying 1-2 points upfront to buy the rate down usually saves money if you hold the loan long enough. The crossover is typically 2–4 years on an amortizing loan. If you plan to refinance within a year, the points are wasted — go with the no-points option even if the rate is higher.
Short-term loans should almost always be interest-only. Bridge, Fix & Flip, and ground-up construction loans are typically 6-24 months. Amortizing a 12-month loan barely pays down any principal anyway, so an IO structure keeps monthly cash flow free for rehab and carrying costs. Make sure the payment type matches the loan product.
Total cost of capital is the real number. Lender marketing fixates on the interest rate because it's the easiest number to compare. The honest comparison includes origination + closing + interest over your actual hold period. A 7.25% loan with 2 points can cost more than a 7.875% no-points loan if you refinance after 18 months. This calculator does that math for you.
For deeper reading on loan structure and when each loan type makes sense, see our investor financing guides.