Is refinancing my properties worth it?

[Alex Buffone]

I currently have two properties on 30 year fixed mortgages, one is at 3% and the other is at 3.5%. I recently converted the garage into two bedrooms and one bath on the property with the 3.5% rate and is now cash flowing at about $1,500 a month. I have a commercial banker who could refinance both loans into one. I would expect to get around 50k in sweat equity back from the one property plus anything extra from appreciation and equity I already have. I have held the properties for over a year. My thought was if I can get enough equity back to buy another deal which would cover the extra interest, which I have been told is from 4%-4.5%, it would be a good move because I would acquire another property and the extra interest would be covered. Does anyone have any thoughts on this strategy or is it worth keeping the current rates/