So far, we have received this advise from appraisers in the Maple Heights area: 1) Attach all offers so the next appraiser can better understand the market value, 2) Provide a letter from the Maple Heights Building Department discussing the addition of the egress window making the bedroom conforming livable space, 3) provide comps for similar properties sold in the Maple Heights area (these do not have egress windows), and 4) create an itemized list of improvements and cost for renovations to the property.We are grateful to the Bigger Pockets community for their advice as well. 

The reason I was mostly considering it, is b/c its a legit space already has bigger windows, a newer kitchen and bath etc.  

Depending on your goals you could either:1) Cashout refinance and invest proceeds in additional purchases2) Sell or 1031-X them into bigger acquisitions3) Combination of both 1 & 2.

Using your own funds to pay down your loan so you get a bigger loan sounds like a zero sum gain (aka IE using 1 dollar to pay down loan so you can net 1 more dollar from the new proposed loan) So how are you going to net more cash when spending 1 dollar to get another 1 dollar ?

If your concern is liability, what I did was get an umbrella insurance policy on the properties I house hacked under my name.

If there is still money left, I would set it in an account and study here on Bigger Pockets and get and education in stocks, options (i love options), notes and real estate.  

I informed them that the rent will probably be higher for the bigger house. 

There are plenty of good people on a platform like bigger pockets that could be a great mentor in the true sense of the word. 

Personally I limit any refinances unless there's something bigger I can do with the cash.

I plan to just learn from those all over bigger pockets as well as my local investment group.