Cash out refi to buy personal residence - good tax benefits?

[Erin K.]

We are going to build a personal home. We have a lot of equity spread out over 13 of rental properties, and we don't qualify for a home mortgage to be sold on the secondary market due to so much self-employment income. That leaves portfolio home loans, and the interest rates on them are not great (4.6% with a 3 year ARM). An idea that occurred to me is the possibility of putting these 13 rentals into one bigloan and doing a cash out refi to cover a large part of the cost of our build, with the thought that the interest would then be deductible, which might have some tax benefits. With 5 kids, we don't itemize, because the standard deduction is so high, so mortgage interest doesn't benefit us. Am I missing something or is this possibly a good idea for the interest deduction reason? Also, the mortgage payment after a large cash out re-fi would be the same as we currently pay on the various mortgages we currently have on our rentals, so our cash flow would be unaffected.

Thoughts appreciated!