Home equity line of credit: HELP!

[Stefanie Brown]

My husband and I are looking at pulling money out of our home with a HELOC to fund the down payment on a STR. I am very confused and could use some help understanding fully. **I am going to use simple numbers but ones that are close to what we are looking at.

We owe $100,000 on our primary residence (at 4% interest) . It is currently worth about $300,000. We were hoping to get a line of credit available to us for $100,000. 

Our current mortgage payment (principal & interest only) is around $600, the new payment (p&i) that the bank is proposing is $1100 at 6.5% interest. (When we initially spoke with them we were told they could give us an interest rate around the 4% that we currently have we were not expecting 6.5%) 

When we are refinancing are we now financing the total amount that the home is worth ($300,000) and not what we owe currently? Is that why our P&I payment is almost double? I thought that we would still be financing the $100,000 that we currently owe with a lien on the property? I was expecting a p&i payment close to what we are currently paying and not double what we are paying?