Best bet is to try local and credit unions, possibly may have some programs for better rates.

Maybe get 0.5% but your rate is going to be a lot higher.

When you're talking about interest rates dropping I think you mean mortgage rates but the government isn't getting rich off of those.

As a percentage closing cost as percentage goes down as value increases but we will 15X to account for closing costsNo cash flow per OP.2% market appreciation equated to 30% + 15% = 45% 3% market appreciation equates to 45% + 15% = 60%4% market appreciation equates to 60% + 15% = 75%Recognize in virtually all markets the cash flow increases with hold length especially if a fixed rate loan. 

My spouse went to school at UT and the rental there is a hold over from graduate school.  

Vs. wanting to make it easier for the people who currently own 0 homes and can't get one because of the higher rates. 

If you've owned for at least that, you're good.If you do a rate/term refinance, where just the hard money balance is paid off, rates will be much better.

We are also seeing an increase due to the lower interest rate debt out there in a higher interest rate environment. 

He may accept a lower rate than bank financing.

VA loans are the only loans that allow this, and there is no rate penalty for it no longer being your primary home.With that in mind, you could do a cash out refinance today at a higher rate than current market rates which will create profit on the loan, we can take that profit to pay for your closing costs.