Any advice on this unique situation?

[Marco Aceves]

My wife and I are in a unique situation and I am posting in hopes that ya'll could help shed some light on this.

My wife's father bought a home back sometime in 2010-ish and lived there up until 2018. He decided to go back and live in  El Salvador as he has dual ctizenship. He was renting the house out 2018-2020 until the tenants moved out but they did some significant damage. While the house was vacant, my in-law got behind $20,000 and pretty much decided to give up on the house. 

My wife and I decided to take over it "as is" from her dad. We got a quitclaim deed and submitted it to the county with the help of an attorney. The house is listed under our name in the countys public records now. We asked the current lender what it would take for us to refinance and they said to pay off the 20k owed plus after that, pay consistent mortgage for 6 months - 1 year.

Could we get the house appraised, find a lender and do a cash out refi and pay off the 20k owed + have down payment money for another property?
Total owed on the house including the 20k is roughly $135,000. We have invested about 20k in repairs and the house is now in great condition. Houses around the area are going for 300k so this could be our rocket fuel to propel us into acquiring more properties. 
The "worst" case scenario is to have to pay off the 20k upfront and up to a year of regular payments. The 20k or the payments are not the issue, its the timeline. 

Thanks all!

PS. To better explain my question: Does the current lender have a "grip" on us with all these timelines etc , or as long as they get their money, they dont care?