Whatever you do, I would not make plans that depend on refinancing after your remodel.
If you are able to refi afterwards, that’s great. But I wouldn’t plan on it.
I would take a fixed rate on the first and use the HELOC for remodeling (However, I doubt that you can get a HELOC for more than 90% CLTV or about 135K in this case)
Since you are planning on using a HELOC for the remodel you will have enough variable interest rate exposure.
I would not compound that with a 5/1 ARM.
Based on my personal experience your remodel may take twice as long and will cost 50% more than you plan. Also, I have a friend who is near the end of a remodel and cannot secure financing to combine his existing 1st and HELOC used to remodel (due to ~ 15% further depreciation in his neighborhood). He is stuck with the terms of his original loans.
You can plan on combining your loans after completions, just don’t depend on that happening.
