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So what is going on with all the mortgage companies? Either they shutting their doors down or some of them stopped funding loans. It all started mortgage loans and jumbo loans which were made to borrowers whose credit score was not so perfect, that is right below 640 FICO, who were self employed, could not prove their income. Jumbo loans are loans that are above conforming limit of $417,000. Any loan amount that is below $417,000 is considered conforming loan and Fannie Mae and Freddie Mac, the two government backed companies are purchasers of these loans.

However; as you may have seen on TV, Alt-A loans and jumbo loans are loans that are causing problems as of right now as banks cannot sell these loans to open market, get additional funding to make new loans. So they are stuck. No Wall Street Investors are buying these loans and banks do not know what to do with its portfolios.

Subprime lenders, lenders that only specialized in Alt-A and jumbo loans could not find any investors to buy these loans and therefore liquidated their companies. So know the finger pointing starts!

Who is to blame? Banks for making these loans? Wall Street companies for buying and selling these loans even further? Or even customers that got those loans in the first place because they did not qualify for conforming loans? Or even mortgage brokers for pushing borrowers to get these types of loans.

There is no answer as who is responsible for these loans. It all started slowly with 1% loans and borrowers who started to default in a huge numbers. Than it escaladed to all non-conforming programs and jumbo loans. But there is no way to know as how far this actually spread. Yes, we are not done yet!

This may get even uglier down the road as additional adjustable rate mortgages will reset soon again and it is expected that most borrowers will default again. Fed however, took one action this week by injecting billions to open market.

So far it is slowly working. Still volatile trading as you have seen news reports all over, but Fed is trying the best. But, what if Fed just lowered the interest rate, would that fix the problem? Yes and No. This is a really tough decision for Fed to make and the injection of funds into open market showed that Fed is watching and trying to help. If Fed lowers the interest rate today and later in a month additional adjustable rate loans are resetting and more borrowers defaulting, we would have the same exact situation. The problem is no one knows how many of these adjustable rate loans will actually reset, no one know how many people will default on these loans. All we have are simply estimates.

But then there is market. Most of the big mortgage companies are traded on stock exchange that has been affected by the current conditions, and of course market will react right away to this situation with nervous i nvestors, start to sell quickly in every sector, and leaves you with Dow loosing 100 points easily.

So what is next for mortgage market? So far many banks have canceled many loan programs that dealt with jumbo loans and Alt-A loans to prevent any future risk. Some banks just simply closed its doors down without any notice. Some are still struggling and hoping that something will happen in the future to bring their portfolios back.

And above all, housing market just killed home prices and many people own more on their mortgage than their property is worth. But it not all over yet!

Right now, everyone will wait what Fed will do and hopefully they will make the right move.

Online brokers negotiate financing deals with several lenders. This may mean that you can find a better deal through their site than by working with the lender. Not all mortgage brokers guarantee the lowest refinancing rates, so you should also compare brokers.

Understanding Mortgage Brokers

Mortgage brokers specialize in finding financing. They work with many lenders to offer you several financing choices. They partner with traditional banks as well as thrift institutions, credit unions, and mortgage companies. They can even connect you with subprime lenders if you have poor credit.

Not all brokers call themselves mortgage brokers. But any site that offers bids from more than one lending company is a broker. Make sure you know if you are dealing with a broker, since this will affect your closing costs.

Brokers collect a fee for each loan they refer to a lender. Sometimes you will pay this fee as part of the closing costs, other times it will come out of the mortgage companys fees. Even with the additional expense of a fee, brokers can usually find you better deals than if you shop alone.

Working With Broker Sites

Online broker sites enable you to make quick comparisons from basic financial information that you provide. Usually, you will need a general idea of your credit score, loan amount, and down payment. The quote you receive gives you a rough idea of rates and closing costs.

Take the time to check with a couple of broker sites to find the best deal. Each broker works with different lenders and negotiates unique deals. Spending a few extra minutes analyzing quotes can save you thousands in interest costs.

Taking The Next Step

Once you have narrowed your choices down for refinancing, request a detailed quote from the lender. This will require the financing company to look at your credit score. You dont want to request too many detailed quotes, since your credit score is temporarily lowered every time a lender makes a credit inquiry.

The detailed quotes will list rate along with terms, such as required points. Even with this accurate quote, it can change hourly based on market indexes and bank rates. If you find a good deal, it is best to act on it quickly to lock in rates.