Decisions decisions decisions…..please help.

[Jast Collum]

Hello BP.
My personal house has been in forbearance since covid. In March of this year  my mortgage company instructed me that forbearance would soon be ending and I had a few options. 

Option 1. Pay off the entire mortgage bill. (Approx 300k)  

Option 2. Come up with the payments that were missed durning forbearance (approx 50k) which would bring my mortgage current, allowing me to refi my house. 

Option 3. Make 3 “trial” mortgage payments and then have my mortgage modified,  extending my mortgage but keeping payments relatively the same as they currently and absorbing the back pay into the modified loan. 

I chose option 3………..however.

After making my 2nd monthly payment the NY state homeowners relief fund (which I applied for in February) agreed to pay up to 50k towards my back mortgage payments which would bring me current. 

My plan for the last year or so has been to cash out refi my house, so that I can do my roof and pay off some other ancillary debt,  I have a lot of equity in the house. I have been unable to do this because of the forbearance though. 

Once NY state informed me that they would help, my plan quickly changed and instead of modifying my mortgage bringing it current and having another 50k worth of equity injected into the house seemed clearly like the no brainer route. 

Unfortunately  after a conversation I had with NY state today,  I learned that if I accept the 50k I can not sell, transfer deed or refinance the house for 5 years without paying the 50K back…bummer. 

So here’s my conundrum.  being that interest rates are steadily going up and it looks like that will bring housing prices down.
Do I? 

1. Take the 50k from NY, bringing  my mortgage current, then immediately cash out refi and pay the 50g back? This would be the most timely option. 

2. Forgo the 50k and instead sign the loan modification contract and wait the 3 months it would take to be eligible for a cash out refi…..this would take the extra 50k of equity out of the equitation though  

Or

3. Take the 50k and then take a heloc towards my home equity which I do not think would alter the mortgage therefore not triggering the 50k pay back clause. 

My numbers are as follows.   current mortgage @ 4.1% fixed with 300k owed.  House is conservatively  worth 550k. I also have a 2nd mortgage for 38k @ 7.49% adjustable 

I’m trying to get myself into a position to start my real estate investing journey and all this has thrown my head for a loop. 
I really hope this all made sense. And thanks a million for getting all the way to the end. Any words of advice of strategies would be appreciated. 

[David Shakhunov]

If you want to get into the real estate investing I would fix the personal finances first. Why wasn't the mortgage paid? Do you have some kind of savings? Also sounds like you have some kind of aux. debt as. There will be a lot of unexpected expenses once you own a real estate investment property. So I would figure out how to fix your debt and personal finances before jumping into the investing. Maybe the best option for YOU is to take the 50K and work on paying off your debt and save up for 5 years. If your income is/will be high enough you can get approved for a second mortgage. It might be smaller amount that will price you out of local market but you can explore option investing in a different state. OR Maybe it is better to go with option 3 and push payments and use the equity to invest in the real estate but if you are not ready financially, this move will hurt you. I think you might know the answer if you analyze your current situation in a greater depth. I can't give you a solid recommendation since I don't know all the details.