Benefits of a cash out refinance

[Michael Shahan]

Hey all... My wife and I became an accidental landlords in 2011 when we started renting our condo in Denver b/c we moved our family back east to be closer to family. I paid $187K for the condo in 2007. I now owe about $140K and Zillow (not very accurate I know) is telling me that it is now worth about $230K-$240K. We are now currently about 5 years into a 15-year mortgage that we refinanced in 2010.

I'm now thinking about doing a cash-out refinance now to pay off credit card debt that we accrued while my wife wasn't working and staying home with my daughter (cc debt is now down to about $45K from $55K when I started repaying). I'm in massive debt-repayment mode now and I'm trying to wrap my head around whether a cash out refi would be a good use of my condo equity in getting rid of the cc debt. 

On one hand, I can see the benefit of getting about $30K tax-free cash out of the condo on a 4% 15-year 75% LTV refi to pay off the cc debt... but on the other hand, it seems like a) I'm going to be paying interest to borrow my own equity over another 15 years, and b) I would be adding another 5 years back onto the mortgage, which I'm not entirely sure is a good idea. Another pro to refinancing would be that I would be lowering the interest rate from 5.36% down to between 3.75%-4%, so it would lower my current monthly payment. Also (and maybe more importantly), instead of paying pmi when we refinanced in 2010, we did lender-paid mortgage insurance of 0.75%, and so I can't get rid of paying that lpmi until I refinance. Now that I have a decent amount of equity in the condo, I feel like the lpmi is just throwing money away.

As a little background, the area where we have the condo in South Denver has really bounced back over the last couple years. We've not really had any problems keeping it rented, and have even talked about moving back there when we retire in 20-25 years or so... so at this point there are no plans to get rid of or sell the condo. Despite the amount of cc debt, we still have pretty decent credit with FICO scores above 720 (just barely).

Sorry, if that was a lot to take in... Anyone have any thoughts about the cash out refi and whether it might be a good option for me? Are there any pros/cons of going the refi route that I'm missing?

Thanks in advance.