Is Rushing To Refinance The Right Move?

CBS Evening News: With Mortgage Rates Their Lowest In Decades, Only Some Homeowners Benefit

(CBS)  Mortgage brokers are enjoying some unexpected holiday cheer, CBS News correspondent Priya David reports.

"Our phone volume has gone up by 300 percent, and e-mail volume as well," said Melissa Cohen, president of Manhattan Mortgage Co. "It's been incredible."

"Every 10 minutes we're getting a call," said Frank Tamayo, a senior loan officer at the mortgage firm Trachtman & Bach.

With mortgage rates falling to historic lows - almost a point and a half since Thanksgiving - the phones are busy.

Most calls are from homeowners like Lisa Snyder, looking to refinance their mortgage, to get a new loan at a lower interest rate.

On a $200,000 mortgage, a one-point difference equals $124 a month in savings. That's $1,500 a year.

"Lisa is going from a 6 3/8 rate to a 5 percent, 30-year fixed," Tamayo said.

And Snyder was delighted to learn she'll save, in the end, $137,000.

But not everyone will benefit from the new lower rates. Brokers tell CBS News that only half of all callers will qualify under banks' new stringent standards.

Paul Hurly has an adjustable-rate mortgage that he got three years ago, without having to document his income. Right now his mortgage rate is only 4 percent, but it could go as high as 19 percent.

"I can't control my destiny," Hurly said.

But the banks will not refinance his mortgage now, because he's self-employed and doesn't meet their new tough criteria.

"Well, I definitely feel trapped," he said.

To refinance at these rates, banks want proof of a regular income, a credit score of 700 or higher, and if the mortgage is more than the house is worth - no deal.

"The banks are really gun shy in lending to people who don't fit a certain criteria, so these people are actually left out in the cold," Tamayo said.

So while mortgages are now more affordable, banks are making them less available.

Still, some will have more cash in their hands every month, giving a boost to the struggling economy.

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Will it get to 4.5% for everyone or just for those under foreclosure?

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