Cash out Refi vs heloc?

[Kari D.]

Advice please!:

My husband and I have a primary residence valued at around 550k with 221k owed @ 3.875%, around 25 years left on the loan. We also have a 100k heloc, with 20k currently used & a 20k HVAC loan tied to home @ 5% for 30 years. We are trying to get everything in order to start purchasing investment properties, using leverage. One consideration was to increase the HELOC, hopefully to around 200k, and leverage that. My lender had suggested to consider a cash out refinance @3.15%, 200k cash out being the highest option, which in turn would force us to close out 20k HELOC, as well as pay off 20k HVAC loan.

My thoughts on cash out refi:

Closing costs are expensive, around 7500. We would wipe out our other debt, but the interest incurred on the debt wiped out over 30 years is considerably higher than the interest on the debt if we were just to escalate its pay off ourselves (at least with HELOC). At the same time, our payment on the cash out would be considerably lower than our debt payments. Allowing us to stack more cash. If the economy takes a dump, we will have the cash in hand and still be able to utilize it to purchase investment properties. Also pressure to deploy money as we don't want to be paying interest on borrowing money for nothing!

Thoughts on HELOC:

Cheap closing costs, $125. HELOC can be locked at a point higher interest rate if we get nervous about variable. If the economy takes a dump and home value plummets, they could limit our line of credit, or maybe even call it due?! Which wouldn't help us move forward in purchasing investment properties. Still have other debts we need to throw money at. Nice that we only have to pay as we use it.

Given the current uncertainty of the world and the overview of my situation, what would you do?