Cash Out Refinance ? Good strategy?

[Oliver Martin]

Hi all. Here's my situation. I bought a house for 150K with cash. There's a local bank that has a promo of 3.99% interest rate for 20 yrs with no closing costs to refinance. I used heloc and cash savings to buy this house. My plan is to do a 80% LTV refinance then pay off the heloc. The heloc is currently at 4.5% interest rate. Is this a good move? If get a cash out of 120K, do I get taxed on that? Is the mortgage interest tax deductible? Thanks in advance.