I am trying to get pre approval for a mortgage loan. However, my debt-to income ratio is too high, due to me refinancing a shorter loan period with a higher monthly payment. I am trying to find a way to decrease the ratio, and increasing income is not likely in my situation right now.

I recently found a credit union that was able to offer me $90,000 at a variable rate starting at 4.25%, dependent on the Feds rate. There are no penalty for paying off the loan early, no points, no closing costs, and no hidden fees. I am currently paying 4.74% fixed. The banker told me "The line of credit has interest only minimum payments and we renew it every 12 months and carry over the outstanding balance." My plan is to get the unsecure line of credit in order to decrease my monthly loan payment, thus decreasing my debt-to income ratio, and thereby becoming a good candidate for pre-approval. Is my thought process correct?

I am trying to understand the motive of a bank offering me this product.  Is it a good rate? Or are they expecting big rise in interest? What are some questions you would ask the banker? Thank you all.