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 Dear
Dr. Don,
I am drowning in debt but have a lot of equity
in my home. I also have a low credit score. What
should I look out for in regard to working with
a mortgage company?
-- Teri Trapezist
 Dear
Teri,
A mortgage broker is just the ticket when you
are a "story loan." What I mean
by that is the lender has to understand your circumstances
in order to approve the loan. Because a mortgage
broker can access multiple lenders a lot more
efficiently than you can on your own, story loans
often benefit from using a mortgage broker.
I'm a fan of using an upfront mortgage
broker, a term coined by Jack Guttentag and explained
by him in the Bankrate column "Want
your mortgage wholesale? Try an upfront broker."
You should be able to get a loan secured by the
equity in your home; you'll just pay a higher
interest rate based on your poor credit score.
Keep in mind that you're not paying
off your debts; you're restructuring them. For
credit card accounts you are securitizing something
that is currently an unsecured loan. Your
unsecured creditors are happy to get their money,
but you just bet the house that you'll be able
to manage your spending in the future and won't
revert to spending more than you make.
If you're so deep in debt that you
think filing for bankruptcy is a possibility,
then you don't want to securitize these debts
without first speaking with a bankruptcy attorney.
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