Brendan Fontaine gets four or five phone calls a day from people looking to refinance.

As a mortgage banker for Reliant Mortgage Co. in Auburn, he tells them rates are at historic lows, with 30-year mortgage rates hovering around 4 percent and 15-year mortgages even lower. He tells them they might be able to lower their monthly bill by $100 or shave years off their loan.

But he also tells them they may not get any of that.

Although mortgage rates are very low, lenders say few qualify for the best rates and some — to the homeowners’ surprise — don’t qualify for a refi at all.

“It has been, unfortunately, quite a disappointment, because I think that a lot of people are finding even if they can save money, it’s not going to be very much,” Fontaine said.

At the beginning of the year, 30-year fixed mortgages averaged nearly 5 percent. By the first week of October they’d dropped below 4 percent — the lowest rate seen since they started being tracked 40 years ago. Although rates have ticked up in the past week, 30-year mortgages still average around 4 percent.

Banks, credit unions and mortgage brokers say they started getting flooded with calls at the end of the summer and the beginning of fall as news of the super low rates spread. For some lenders, applications for new mortgages had already increased. Refi inquiries started topping them. 

At CUSO Mortgage Corp., a Hampden-based mortgage company owned by credit unions, summertime business was equally split between new mortgages and refinancing. By fall, refis accounted for 80 percent.

“It’s been a huge swing with rates dropping,” Karen Reed, CUSO senior vice president, said.

At Northeast Bank in Lewiston, the mortgage business — both new loans and refinancing — has doubled since spring.

“I hesitate to call it a ‘refinance wave’ because it’s not maybe as big as it was a couple of years ago, but we are definitely seeing an increased level in activity,” Marcel Blais, chief financial officer, said.

But while lenders have been fielding more calls from people interested in refinancing and some homeowners have gotten as far as submitting an application, not every refi goes through.

That’s because the very lowest mortgages rates are given only to homeowners with excellent credit and high credit scores. The higher the mortgage rate, the less of a monthly savings. And what savings there are can be eaten away by mortgage insurance required by lenders when the homeowner doesn’t have enough equity and needs to finance more than 80 percent of the home’s worth. 

In some cases, homeowners think they have enough equity, only to learn during an appraisal that their home value has dropped and their equity has vanished.

“You’re seeing their property is lower than they think it is, and/or they owe more than the property is worth. That is probably the biggest issue we’re seeing right now,” Blais said.

When a property value is low but there’s some equity, the homeowner can refinance but likely at a higher interest and with additional fees, including mortgage insurance that can cost $100 a month or more.

“So they have to weigh out, is it still worth it?” Reed said.

When the property owner has no equity or owes more than the house is worth, lenders generally won’t refinance at all. 

Although lenders have ways to gauge a home’s value, the only official valuation can come from an appraisal, and that can cost about $350. Lenders recommend that homeowners be realistic about their home’s value and how much it may have fallen before moving forward with a paid appraisal. 

For homeowners who believe they have enough equity and a high enough credit score to get a good rate, lenders recommend they do a little math, factoring in closing costs and any up front frees, how much they’ll save on their monthly payment and how long it will take before that savings adds up to be more than the upfront costs.

“It doesn’t do you any good to refinance if you’re planning to leave the home you’re in a year from now, if you have a fair amount of upfront costs,” John Murphy, president of the Maine Credit Union League, said.

But despite the possible downsides, lenders say it makes sense for homeowners who financed their homes a year ago or more to look into refinancing. If they qualify, there’s savings to be had.

“It never hurts to ask,” Blais said. 

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