I love my house.  It was/is affordable.  I feel like I'm not doing my
taxes right, when I end up taking the standard deduction each year -
I'm never able to deduct my mortage interest because there's not
enough of it.  All my itemized deductions always add up to less than
the standard deduction.  Ten years now in this same house.  Now I have
lots of equity.  I'm thinking of a cash-out refi and use that cash for
some good investing.  Maybe then I'd have enough interest to start
having some tax-advantage.  For example; I'm thinking of putting a
down payment on the house next door, and renting it out.  Therefore I
control how that house looks and, somewhat, who is my neighbor. 
Additionally, I'm considering buying some more stock in my company.  I
know, with Enron in the back of our minds, would a person want to do
that?  My company is a major private food retailer with 16%
growth/year for over 40 years - thousands of employees retiring
well-off.  I do think if I were to do this I'd need to diversify,
perhaps some IRA-type plans in addition to my
company-401k.  I'm am maxed on my 401ks.  I have little debt aside
from this mortgage.  I'm 39.  I can afford the payments on the new
mortgage - I'd basically be leveraging.  I'm married and have two young children.

So, it's a two-part question:  One; is it odd that I have to take the standard
deduction each year, that I never have enough itemized decuctions, and
two; should I do a cash-out re-fi and use the proceeds for investing?

I am a mortgage lender, real estate investor, and also have a fairly
sizabel investment portfolio. I also work with the clients of a lot of
financial advisors - so maybe I can be helpful. Only make the Real
Estate invesmtent if the return makes sense, not to increase your tax
write off.  The mortgage deductions is one of the last great shelters,
and that is what makes real estate investment so popular - and also
one of the reasons housing prices are high.  If you provide your
email, I will send you a very simple real estate investment spread
sheet I use to analyze potentital investment property.

Here is another way to look at the interest tax deduction. If your tax
rate is 30%, you are paying out $1000 in interest to save $300 in
taxes. What a deal!!!In my opinion it is never a good idea to borrow
money to invest. Save the extra money you would be putting into the
payments and invest it. Or use it to accerate the payoff of your
existing mortgage. think about how you can save and invest when you
don't have a house payment!

The numbers are the numbers.  If you have to use the standared
deduction, that's it.  On the other points; don't incur expenses just
to get a deduction.
However, if you refi and can make the new payment, there is nothing
wrong with investing the money in either your retirement plan (you
know to diversify - if your pension is tied to the company you don't
want all your other funds tied up in their stock either.  Better if
their 401k allows you to direct that money into another stock/mutual
fund) or an investment.

If you have never been a landlord before, seriously reconsider renting
out a houae next door to you.

You would benefit by reading up on personal finance, I recommned Ric
Edelmen, his website is ricedelmen.com .  He recommends having as
large a mortgage on your home as you are comfortable with.

If you escrow yourself and have a big property tax bill.  The thing to
do is Double up your property taxes in one year, ie pay your 2006
taxes in Jan 2007 & pay your 2007 taxes in Dec 2007.  In that year you
itemized, donate, etc.  Then in the next year take the standard
deduction.  Taxes look at when the cash was paid not the year of the
the property tax.  My old boss taught me that trick.