What exactly is a jumbo loans Colorado? It is actually a technical term in the lending industry, and means a loan that is normally too large for a property or a particular client. A jumbo loan is used to finance a property that has characteristics desired or needed by a customer and might include a loan for a farm property or for seriously upgrading a house. Regardless of the needs of the client, banks look hard at the passive and regular income of a customer and set pretty stringent requirements.
It is possible to find jumbo loans Colorado residents might find appropriate for the property they seek after. While Colorado has some wide open spaces, a good sized house or property might still demand a pretty huge chunk of change. A jumbo loan usually exceeds half a million dollars, and plenty of real estate now exceeds this threshold. As Colorado has its share of rural property, getting a jumbo loan is not that unusual.
The real threshold for a jumbo loan is set by federal law, as loans larger than half a million dollars are not backed by the federal banking system. This means there is no insurance for the lender if a borrower defaults on their loan. Depending on the nature of the property, it might be difficult to recuperate a loan that has been defaulted by the borrower. Large homes in general tend to be hard to sell and might depreciate.
Since banks are on their own when it comes to a jumbo loan, they set their own requirements and often scrutinize the borrower quite a bit more closely than with conventional loans. As huge loans are a bit more permissive in terms of lending standards, banks are free to set more stringent terms. There is really no such thing as a subprime jumbo loan.
People with more assets or bigger salaries simply have an easier time getting a jumbo loan. A large salary can make bigger payments, and the stability of the job matters too. As a general rule, large salaries come from jobs that offer considerable stability as the position is filled by a highly trained or competitive worker. Some high paying jobs are a bit unstable, and banks have a right to examine this.
Jumbo loans come a bit easier for someone like a doctor who is wanting to invest in a farm for retirement. This is a common theme. For someone wanting to buy a modest sized mansion, having quite a bit of money in other assets can be quite reassuring to a bank because these assets mean private income and the ability to liquidate savings in the event of a financial restructuring episode.