When you're borrowing money to borrow money you're going to quickly hit DTI limits.

If you cash out your current equity, you will be borrowing money for the down payment.

Part of my business was providing loan servicing for seller financed transactions and this type of intervention between a borrower and seller, I would have to say, was more than welcomed by underlying mortgage holders (banks).

the answer is because this is what professionals do and it's the price of admission to really establish your real estate business properly from the outset.Having a lien, loan, etc. on the property does not indicate personal liability exposure to real property because being the borrower on a loan does not equate to holding legal title on the underlying property. 

You’re borrowing against the equity in your home, so the money is not income but rather loan proceeds that you’ll need to repay.The pros of a cash-out refinance for most investors include the ability to build their portfolio and scale their real estate investment business.The cons could be trading a lower interest rate for a higher one and increasing your loan-to-value (LTV) ratio.

I think this falls on the borrower in most cases.

I had a client gathering information from them, but you had to borrow through a new LLC (at the time), which didn't make sense to me.

I have personally done this to borrowers of mine..

Depends on the deal specifics and the borrower's track record and liquid reserves. 

Best I've seen for a hard money loan is 10% down of the purchase price with 100% of the rehab covered depending on the borrower profile.