BY JOHN N. FRANK

Mark Lefanowicz, president of mortgage Web site E-Loan, discussed at Real Estate Connect last week how much more difficult it’s becoming to find financing for people with low credit scores. Last summer, E-Loan could counsel people who had scores around 540 (620 is generally considered the subprime cut-off level) on how to raise their scores to 600 and qualify for mortgages, Lefanowicz recounted.

These days, those scores need to be raised to 620 to 640 to get lender interest.

At the same time that lending standards have tightened, more people in the subprime score range are looking online for mortgages, he noted.

Roughly 70 percent of applications to E-Loan in the past were from people with scores above 620. Today, 50 percent of applications are from those with scores below 620.

Lefanowicz theorized the shift was coming because people with low scores feel less intimated looking for mortgages online as opposed to seeing a mortgage broker or other lender face-to-face.

Speaking on the same panel with Lefanowicz, Patrick F. Stone, chairman of The Stone Group, a commercial brokerage and development company headquartered in Austin, Texas, said one of the most important services a real estate professional can provide clients is to make sure they understand the provisions of any mortgage they’re taking on.

Borrowers don’t like asking questions at a closing when one document after another is being shoved in their faces, but that’s exactly when they should slow things down and understand the financial obligation they’re taking on, Stone argued.

Good advice to remember at your next closing!