Cash-out refi on primary, to pay off/down rental ARM?

[Matt Leonard]

This makes sense to me - but would love anyone else's feedback. Thanks in advance!

I am in process to cash-out refi my primary ($850k value, $240k owed, 3 years in on a 30-year fixed at 3.75%) - at a 30yr fixed at 3.4%.  Hard to beat a rate like that in 2018.

I have an investment property ($260k value, $105k owed) - on a 3% ARM - (4 years in) and 3 years left before it resets. One can safely predict that rate is going to go up on the reset - 5% to start, and then likely higher each reset annually.

I'm debating about pulling more cash out of the refi to pay down (or potentially off) the investment property. While my overall debt won't change - I can consolidate it all at a much better rate long-term, and increase monthly cash-flow.

Of course, the terms lengthen (to a new, full 30 year) - but I can comfortably pay the difference towards principal-pay down so that the interest over life of the loan comes down. But this scenario also gives me the flexibility to not have to do that in an financial emergency, or sock away more cash flow towards the next investment.

Any pitfalls I am missing here? I realize leveraging your primary is usually not advised - but I have plenty of equity even in a 50% market crash, and am in a strong market (SF Bay Area)

Appreciate any advice!

-Matt