Conventional financing (usually cheaper) does not allow you to use LLC's, it must be in your personal name (or a trust). 

If i cash out refi, its going to cost me 259k in interest to take out the 150k to use for a down payment.

Why are you not wring off the interest payments?  

When you look at the Pro's and Cons or a Heloc there are much more Cons...I would run the numbers on an actual cash out refinance even if you have a low first versus a 2nd lien and Heloc payment combined with 1st.  

Projects can be done 25% faster, loans exited sooner, less loan payments.

Best to put the money into a trust account (or escrow account) for that purpose.

Tax season is in full swing, and for most individual taxpayers, the looming deadline for filing and payment is Monday, April 18, 2022.

In the future, either make sure it's taken care of before they move in or have a trusted boots-on-the-ground team member who can take care of it for you. 

Here's the math, if we do cash out refi on our home, the payment would goes up $700 more than what we are currently paying and of course the year term loan goes from 7yrs to 30yrs.

The plan includes how they will pay for arrearages and typically, the arrearages will be paid for over 3 or 5 years (36 or 60 payments).