In my situation is an interest only mortgage right for me?

I own a home, brought it in 12/04 (2 years to the date) for $ 242,000, the Appraised Value as it stands is $ 305,000 so it has appriciated $ 63000 in 2 years. Our current mortgage is a 30 yr fixed rate for 5.875%. We are looking into getting a 3 year interest only loan with $ 30,000 out to finish our basement, and pay off our car, and credit card bills. With everything figured out we will be saving around $ 200.00 per month to invest or save, and adding 800 square feet of liveable space, which increases our value even more. I am having 2nd thoughts about the interest only part. We are at this time planning on selling in the next 2-2.5 years to try to make some money. What should we do?
My Current P&I is 1470, The Interest only rate is 6.85 with a payment of 1565. I would see amonthly savings from my car and a credit card
We cannot afford to do an equity line for the 30K we are getting quotes of $ 400 more p/m with a variable rate. On a second we are getting rates of like 9-10%

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