Should I Refi my Rental?

[Mike Applegate]

I have only one Rental that is worth $220k with a 4% 20-yr loan. I owe $130k and I make about $200/mo cash flow on it.

I can refi at 5&3/8% on a 30-yr, pull out almost $30k to pay off some non-productive debt affecting my credit score, have $10k left over and increase cash flow by another $150/mo for a total of $350/mo.

Paying off this outstanding loan will allow me to increase a HELOC on my primary to about $50k that I want to use part of for 20% down and minor rehab on another rental.

Two different mortgage officers say don’t give up the cheap money by refinancing with a higher rate but I feel like the money I can make on another rental is more than worth it.

Is this just the difference between them wanting to pay off debt and me wanting to leverage it for more positive cash flow?