Seeking Creative Financing Solution

[Keith W.]

During the real estate debacle a few years back, I fell victim to getting a loan modification workout understanding the terms. Maybe not a victim because I still own my house, but sort of because now I know there were other options. 

Anyway, a $100k silent second mortgage was placed on my home. This is the victim part because you are not made aware of this when you’re going through it. I’m sure it’s in the legal fine print somewhere but when you’re on the verge of losing your house, your focus is more on the bottom line. 

Anyway, this information doesn’t show up anywhere. Mortgage statement, credit report, nowhere until a title search is done by the bank when you want to sell or refinance. That’s how I found out about it. I called my bank and they had to do research to find info on it. 

So now I'm in the position of having to consolidate my first mortgage of $270k with the silent second of 100k in order to get an HELOC for another $100k in order to get my real estate investment business started.

I’m be going from a $270k mortgage to $370 with 100k to work with to acquire property. I plan I’m using the Buy Rehab Refinance strategy and make lump sum payments on my home mortgage to bring the balance back down.  

Does this sound like a smart strategy? My hard money lenders all require 10% down on any property I want to invest in and I would need money to get the work started. 

I’m thinking if I ever sell my house or do anything financially, I’ll have to deal with that $100k second at some point. 

Please advise with tips or suggestions, alternatives.