Falling Treasury yields are pushing mortgage rates to lows not seen in over a year. With the rate on the 30-year fixed mortgage falling below the psychologically significant 4 percent level, phones were ringing at lender shops large and small on Wednesday. Should you be calling? CNBC's Diana Olick asked Matt Weaver, vice president of Mortgage Banking at PMAC Lending Services in Boca Raton, Florida:
CNBC: Who should be calling you to refinance their mortgage today?
CNBC: No, seriously.
Weaver: Someone who has purchased their home over a year ago, who has a mortgage with mortgage insurance, and/or who has or thinks they have the need for some type of home improvement and/or someone who has revolving credit card debt that exceeds $10,000.
CNBC: So that's a lot of potential customers?
Weaver: Right now what we're doing is reaching out to our entire database, and the reason is not necessarily rate-for-rate, meaning does someone have a 4.25 percent interest rate? What's the rate today? And what can that savings be rate-for-rate? This is the time now to look at the global picture. A lot of people purchased in the last three to five years, and this is the opportune time for a cash-out for home improvement, to pay off credit card debt or whatever type of lifestyle changes may have taken place to where money is needed.
CNBC: Why should borrowers with mortgage insurance be looking to refinance, especially?
Weaver: A lot of the first-time homebuyers purchased over the last three to four years, whether using FHA as their vehicle with a lower down payment, or conventional with a lower down payment, but they also had mortgage insurance, so while their interest rate may be 4 percent or 4.25 percent, when you factor in the mortgage insurance that they're paying, it's relatively much higher. Because of the increase in property values, we can get them to remove the mortgage insurance from their current loan.
CNBC: Who should not be calling for a refinance today?
Weaver: Someone who has an interest rate in the high threes and low fours, someone who is not looking for any type of cash-out. Someone who does not have mortgage insurance. Someone who is applying more principal payments towards their loan to shorten their term. They're already on a determined road.
CNBC: Should you consider your credit score before even trying?
Weaver: The credit models are not as strict as some may think. Fannie Mae/Freddie Mac will go down to a 620 FICO score, will go up to an 80 percent loan to value in terms of cash-out. For FHA, it will go down to a 600 credit score on cash-out. So as far as the availability piece goes, if someone just recently purchased their house, they don't have the equity components within their property, then maybe they wouldn't be a good candidate. Why go through the closing costs again?
Read MoreMortgage rates dip below 4 percent
CNBC: Are these low rates prompting us to make the same mistakes we made during the housing boom—using our homes as ATM's?
Weaver: What's different this time is the loan-to-value cap. Lending is not going to go beyond 80 percent, whereas in 2005/2006 it went to 100 percent financing. That's off the table. For every $10,000 that someone borrows, it results to about a $50 a month payment. Apply that toward an automobile, where you owe $20,000, and the payment is $475 a month. Significant difference. People can re-route their money.
CNBC: Final thoughts?
Weaver: Get a diagnostic check.