Right now you money is not utilized at its full potential with being tied up in this home. 

Are you looking for customers?

I'd like to refinance out of the VA Loan  to buy another property utilizing a VA loan and I don't want to be stuck paying PMI on either loan.

Based on price of 1.75M with rents at 12k, highly unlikely you can get 5 CAP even with a near new building considering property tax, insurance, utilities, vacancies, property management, etc. 

Let me answer your questions first, then, I will provide comments and my own questions.Billing tenants for owner paid utilities will depend on what is acceptable practices in that area.  

Of course you could also go higher if you are going with very high and, custom finishes.

Also local custom will play a part here.

the banks are simply cross selling their  products   figuring the more connections they have with you - the longer you will be a customer ...often they will offer an incentive  like a slightly lower rate  or removal of a loan fee  in order to  entice you to open up an account ….. don't overthink this  option …..all the best

The customer service representative says we are still in the underwriting phase and it hasn’t been brought to the investors for final approval and this is the last thing holding it up.

All of my customers are construction related since my background has been in the construction industry.I joined the Air Force as an apprentice carpenter and became a superintendent within 5 years.