Interactive Brokers has even better rates for borrowing on margin. The benefit of a cash out refi is having no risk of a margin call. Margin calls are what makes leveraged investing so dangerous.
For each extra $1,000 I borrow at 3.25% for 15 years, my payments would increase by about $7/month or $84/year.
Applying the 4% rule to $84 in expenses, I would technically need an extra 84*25=$2,100 to retire for each $1,000 I have on loan at the time of retirement. Presumably I could just prepay the money back into the mortgage at the time of retirement, but this would only change the loan’s duration, not the payments, unless I did some sort of recast. This is the downside of home equity investing.
Assuming I pay off the mortgage upon FIRE in 5y, what matters is could I earn more than 3.25% per year over those 5 years with the additional requirement of safety I need for borrowed money? (Maybe having a different risk tolerance for borrowed money than I have for owned money is irrational, but borrowed money definitely has more strings attached and increases SORR more than owned money.)
My best idea for the funds would be to apply them as a down payment on a rental property. My math shows an ROI on the down payment of about 5% on the deals near me. Not exactly a life changing spread there.