Personal finances of mortgage borrowers continues to improve

As both the economy and national job market continue to gain momentum, a recent report indicates that the private employment sector added more than 200,000 jobs for the second consecutive month in March.

As both the economy and national job market continue to gain momentum, a recent report indicates that the private employment sector added more than 200,000 jobs for the second consecutive month in March.

The private sector added an estimated 209,000 new jobs last month, according to the ADP National Employment Report. This finding is parallel to predictions made by a number of industry experts, after a survey from Econoday anticipated the addition of 208,000 private jobs in March.

"The March increase in private employment suggests that the national unemployment rate may have declined slightly last month," the ADP report said. "It would also be consistent with other indicators suggesting some firming of labor market conditions, such as the downward trend in unemployment claims and upturns in the components of consumer sentiment and confidence influenced by perceptions about the availability of jobs."

Specifically, the report noted that small businesses were responsible for a significant portion of the hiring, after adding an estimated 100,000 jobs. Meanwhile, medium-sized businesses contributed 87,000 employees to their payrolls, while large companies were responsible for approximately 23,000 jobs.   

As employment conditions improve across the country, it could give American consumers the safety and soundness they need to make major financial decisions, such as owning a home.

To add to the sentiment that borrowers' personal finances are gaining traction, a recent report from Ellie Mae found that in February borrowers had higher FICO scores, while loan-to-value ratios remained relatively unchanged.

"In February, it appears that lenders continued to be very cautious in terms of credit quality, down payments and valuations," said Ellie Mae chief operating officer Jonathan Corr. "The average credit score on closed loans was 750 last month, up from 740 six months ago; meanwhile, the average loan-to-value ratio was 76 percent, a decrease of 3 percent from August's average."

Additionally, the report also noted that the average number of days it takes to close a home increased to a faster pace. In February, the average was reported to be 44 days, down from 46 in November 2011, but slightly higher than August's average of 40 days.

Meanwhile, when examining mortgage records, Ellie Mae found that borrowers who were denied mortgages during the month on average had a FICO score lower than 699 and loan-to-value ratios of 83 percent.



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