if you have a mortgage broker you are comfortable with I would just ask them to run the options for you. Factor in the closing costs, etc. With rates as low as they currently are, I would try to get a fixed rate loan whether it was HELOC/refi on the primary or a original loan on your investment property. It might be quicker/easier to get the $ on the current house since it would not be run as a second home purchase (which are more difficult to get approval), but weight the up front costs, the interest rate you are offered, any othere costs.
One thing to also keep in mind is that if you tie up all the equity in the current property with a new refi/heloc and need to sell in a few years, you may end up having to bring some cash to the table when you sell. Many markets, while not droppng like they were, are still showing small declines and could easily loose another 10% or more before rebounding so if you went to sell in 5 years, you may actually be right at where you are now value wise. Add in realtors fees and selling concessions and you may need some $ to sell within the first 5 or 6 years. The good side is that you would have the 2nd home free and clear and once the 1st sold, there would be no mortgage.
