If I need a mortgage modification to make mortgage more affordable and also want to get a home equity loan to consolidate debt and make that more affordable, which should I complete first?

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If I need a mortgage modification to make mortgage more affordable and also want to get a home equity loan to consolidate debt and make that more affordable, which should I complete first?

I need to get a mortgage modification because I became ill and am having trouble
making payments. Throughout the course of the illness, I also incurred a lot of debt
that isnt covered by any financial assistance and the monthly payments are killing
me, so I also wanted to get a home equity loan or fixed rate line of credit. Which
should I do first? I am very confused. Ive been reading that modifications can hurt
my credit score, so should the home equity loan be done first? Will I jeopardize my
chances in getting a mortgage modification if I get a home equity loan and then file
for a mortgage modification soon after? It shouldnt affect this second mortgage if I
file a modification, but I dont want to give my mortgage company the impression
that I can pay the monthly payments on my first mortgage any more easily just
because I got a home equity loan. I somehow need to do both the mortgage
modification on my original mortgage and the home equity loan or line of credit in
order to get all of this back under control.

Asked on March 23, 2019 under Real Estate Law, Tennessee

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

This isn't a legal question, because legally, you have the right to do both. It's a borrowing strategy question, so to speak, because it's about how to maximize your change of getting the money you need and payments you can afford. Lenders have the right to decline any loan or modification request they want, if they feel it's a bad deal for them--they make loans voluntarily. So the issue is, what loan(s) or modification(s) should you seek first, for how much, when, and how do you present your situation to the lender to increase the odds of them saying "yes"? You should consult with a mortgage broker: someone whose job is to find the best way to get you the financing you need. That person will be in the best position to help you do this.


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