Refi Cash out into Fixed Interest only loan
So I own two duplex's one I live in and the other Is a full time vacation rental. The vacation rental was my first one i lived in I put 20% down with a purchase price of 1,005,000 2.5 years ago. I had no credit due to paying cash for everything my whole life so my interest rate is %5.375 and I owe $775,000 my gross rents this last year was $138,000 after operating costs not including P&I is $105,000 a year in rents collected. Just finished rehabing my second duplex that i live in I used a private lender for down payment and rehab costs totaling 70k with a 10% interest. I have been searching for some ways to pull money out of my first one which just appraised at 1,350,000. I contacted a private mortgage lending company that is offering me 200k cash out at a %5.5 fixed interest only loan on 1 million after 10yrs I keep the same interest rate and it is refied into a 20yr loan. Catch is no refi or payment of 20% down against principle for 3 yrs without a penalty. They also offer a fixed rate 30yr at 5.5%. the interest only loan i could comfortably put $800-1000 a month extra towards principle. If any of you were in my situation what would you do?