Santa Cruz Real Estate Articles

News and Information you need when it comes to Santa Cruz Estate!

May 21, 2019

Santa Cruz Mortgage Insurance

Mortgage Insurance is very common for today's Santa Cruz home buyer. Mortgage Insurance is a special insurance banks put in place to avoid losses in case of a borrower defaulting on their loan. The most common time mortgage insurance required is used inSanta Cruz is when a borrower comes in with less than a 20% down payment. The concept is that lenders typically require a 20% down payment, as they have researched, that this amount of equity in a property statistically reduces the changes of a borrower walking away form their obligation. At 20%, a lender believe this is enough of a buffer between the loan and the value of the home to pay for any attorney fees, REALTOR costs, repairs, etc. in the event they have to foreclose on the borrower. 

There are different terms that are thrown around describing this insurance. PMI stands for private mortgage insurance. The terms MIP or MI are acronyms for Mortgage Insurance Premium or Mortgage Insurance (respectively). They all generally mean the same concept. 

Depending on your loan type, there may be different rules, costs, or ways mortgage insurance is both added onto the loan and requested off. Besides loan type which I will cover below, the typical factors that affect Mortgage Insurance are 

1) Credit Score: lower credit scores have higher mortgage insurance premiums. Typically to get the best and cheapest priced insurance you should be above 760 FICO

2) Down payment: the lower the down payment the higher the cost for mortgage insurance

3) Term and type of loan: short terms loans of 15 years carry cheaper monthly costs than higher term loans

4) Specific loan program: there are some first time homebuyer programs that if the property both falls within a certain area or the borrower takes a first time homebuyer class, the rates for mortgage insurance are cheaper. 

The most common mortgage insurances are as follows: 

Conventional Monthly Mortgage Insurance: A monthly insurance premium included in the mortgage payment. This amount can be eliminated by a few different ways. Upgrading your property, or principal pay-down or waiting the required time are common ways to eliminate the monthly cost. If thinking of removing it, its best to contact your servicing bank and ask for the PMI removal letter/guidelines which make it very clear what the current requirements are.  

Conventional Mortgage Insurance Buyout: This is a one time fee/amount paid to the mortgage insurance company as an opportunity to “pay off” the mortgage insurance up front. Doing this eliminates the monthly charge. The Buy Out amount is typically 1/3rd the cost comparted if you were to keep it for the regular monthly term. 

FHA Mortgage Insurance: The FHA loan has quickly become the loan of choice for first time homebuyers. With low down payments, flexible minimum credit score requirements and flexible underwriting standards it has been a valuable tool for many first time homebuyers. HUD (the administrator of the FHA loan program) requires that a specific rate for monthly mortgage insurance be charged for every FHA loan. in addition they require an up front amount to be paid. This can be paid by either financed into the loan amount (added to your principal balance) or allowing a borrower to pay the amount up front included in closing costs. In the past a borrower could remove the PMI after as little as 5 years. Now FHA has made the insurance a permanent feature of the FHA loan, where the only way to remove it is by refinancing. 

Although an added cost to a mortgage payment sounds like a detriment, without the ability to obtain Mortgage insurance, we would go back the old times of needing 20% of the value of the home as a down payment. This would reduce the amount of borrowers that would be able to be homeowners and a true detriment to the first time homebuyer. 


March 25, 2019

100% Financing on Santa Cruz Homes

Did you know you could still apply and obtain a home in Santa Cruz with $0 down payment? Yes, 0% down, 100% financing is still available with Santa Cruz Lending Group!

Established in 1975, California Housing Finance Agency (CalHFA) works with lenders like Santa Cruz Lending Group to help homebuyers by providing programs that help get first time homebuyers into homes with little to no money out of pocket. CalHFA is a completely self-supporting state agency, and its help is repaid by income generated through mortgage loans, not taxpayer dollars.

The money you put "down" or the down payment on your Santa Cruz home loan is normally a large challenge for first time homebuyers.  CalHFA offers several options for down payment and closing cost assistance. This type of assistance is often called a second or subordinate loan. CalHFA's subordinate loans are "silent seconds", meaning payments on this loan are deferred so you do not have to make a payment on this assistance until your home is sold, refinanced or paid in full. This helps to keep your monthly mortgage payment affordable. 

Programs available are as follows:

First Mortgage Programs - This includes FIXED 30 year loans for Conventional, FHA and VA loans called CalPLUS.  

MyHome Assistance Program -  Offers 2nd loan up to 3.5% of the purchase price to help with down payment and/or closing costs. 

School Teacher and Employee Assistance Program (School Program)-  This program is for teachers, administrators, school district employees and staff members working for any California K-12 public school, which includes Charter schools and county/continuation schools. These loans are up to 4% of the purchase price for down payment assistance and/or closing costs.

The main requirements to participate are as follows: 

1) Borrower requirements
2) Homebuyer education requirements
3) Property Eligibility requirements 
4) Must be a First Time Homebuyer that intents on occupying the property

Borrower Requirements - CalHFA does not accept applications directly. Santa Cruz Lending Group will qualify you for a home loan. Each loan program that CalHFA offers to homebuyers can have different criteria for income limits, minimum credit scores, citizenship etc. You will need to occupy the property as your primary residence and complete a homebuyer education counseling class to obtain a certificate. 

Homebuyer Education Requirement – This class can be done online with a one-on-one follow up session. 

Property Eligibility Requirements – to be eligible for financing, the property must be located in California, be below the sales price limit, max 5 acres, but be a single family residence (condo’s and Townhouses ok!), and in certain cases, manufactured homes on permanent foundation (not leased land in a park). 

Must be a first time homebuyer - Down payment programs like School Teacher and Employee Assistance Program require you to be a first-time homebuyer. A first-time homebuyer is defined as someone who has not owned and occupied their own home in the last three years. 

Victor D. Romero
Mortgage Consultant
(831) 214-2172 Cell
(844) 870-9457 Fax
Santa Cruz Lending Group P/B Mason McDuffie Mortgage Corp.
2425 Porter Street, Suite 13, Soquel, CA 95073



Posted in Home Buyers
March 24, 2019

Unlock Your Dreams of Investing in a Retirement Santa Cruz Vacation Home

If you hit retirement with more than enough to cover your lifestyle on a fixed income, you may be considering investing in a vacation home in Santa Cruz. It’s a great idea. A second home can be your warm-weather escape throughout the unbearable winter months. You can find a place closer to your grandkids and finally get to see them more often. Or perhaps you like the idea of a great Santa Cruz beach house you can rent for some extra passive income you can either enjoy now or leave behind for your family.


Whatever your reason for buying a vacation home in retirement, don’t get started without reading this crucial advice.


Searching for Your Second Home


Before you start looking at houses in Santa Cruz, you have to know where you want it to be. Ask yourself what your goals are with this property. Is it something you mainly want to use yourself, or are you hoping to rent it out? Do you want to be closer to family or find a place in a third location everyone loves visiting? Once you know your goals, it will be easier to narrow down the perfect area for your vacation home.


Once you have an idea for location, research vacation homes in the desired area. Check to see if it is a buyer’s market or a seller’s market right now. You can get also get an idea of how much you will end up spending and if it makes sense to look in a different area.


Important Santa Cruz Vacation Home Decisions


Owning multiple properties presents its share of challenges. If you take care of your home maintenance yourself in your main residence, you may need some time to adjust to outsourcing that work to someone else. If you don’t live there on a regular basis, you’ll be unable to take care of responsibilities including cleaning, lawn care, and pool maintenance yourself. There are a few second home services you’ll need to find:





      Property management, if renting

      Pet sitting, if needed


When looking for a contractor, focus on finding someone who communicates well. They will have plenty of experience working with people in situations similar to yours. You can also take the time to ask neighbors about recommendations. Of course, you can also review online references, but there’s nothing better than a personal endorsement from someone whose opinion you trust.


Keeping Costs Down


When it comes to your vacation home in Santa Cruz, there are two main areas where you should focus on keeping the costs down: the utilities and insurance. You can help keep utility costs down by investing in environmentally friendly energy options. Not only will you save money on how much power you use, but you can also receive some substantial tax benefits with each Energy Star update you make.


You can keep home insurance costs down a few different ways. First of all, you need to shop around for the best rates and offers. Of course, it may make sense to stay with your current insurer. Ask your representative about bundle rates for things such as second homes. Finally, avoid investing in a high-risk area. The less you have to claim, the cheaper your insurance will be. Insurance is a safety net, not a payday.


A second home can be an escape from bad weather, a connection to your family, or a source of passive income. When looking for a house, consider what you want to use it for. Find an experienced real estate agent who can help you find the best house and refer you to people in the area for help. Finally, do extra work in the beginning, including updating to energy-conserving appliances and shopping around for insurance, so you can save money in the long run.

Posted in Home Buyers, Investing
Feb. 3, 2019

Santa Cruz Bridge Loans

Imagine you own your home in Santa Cruz outright, or have a very small mortgage on it. Let's say your property is worth $850,000. You would love to buy your next Santa Cruz dream home which is valued at $1,000,000 but to do so you would need to access the equity of your current home to either pay cash or use as a down payment.  What would you do in this case?  Good news:  Santa Cruz Bridge Loans can come to the rescue.

In the past, the only options you had available were to either sell your home before you purchased a new home or make your offer based on a concurrent close, meaning you need to sell your home before you buy the new home.  Both options are sometimes difficult to accomplish, since if you sell you home first, where do you live in the short term? Or, if you make your offer contingent, it may be viewed as a less attractive offer since its dependent on your buyer being able to perform and close before you are fully committed to purchasing your home.  

Banks have recently rolled out a new product called a Cross Collateral Loan!

Cross Collateral Loans are often referred to as Bridge Loans, which allow you to borrow the required funds to complete your new purchase without waiting for your home to sell. Bridge Loan lenders allow you to put in non-contingent offers and close on your new home without having sold your old home.  In many cases you don’t even need a down payment as they secure their loan with both the new property and old property. This would make your offer much more attractive to a seller as they don’t have to wait until your home sells. 

This loan allow for 0% down payment and recasting, meaning you can keep this loan for a few years. You would still have to qualify for the loan, but there is no need to actually sell your home to obtain funds. 

After you sell your home you can either pay-off or pay-down the bridge loan. Or you could simply refinance the bridge loan or convert it into a regular mortgage loan. 

The convenience is yours - of being able to actively market your current home and still be able to place offers on properties without it being in contract. 


Dec. 29, 2018

Top Tips for Santa Cruz House Flippers

Are you wanting to get in on the house flipping craze in Santa Cruz?  It's been reported that about 8% of homes sold nationwide in 2017 were flips - that means hundreds of thousands of people are cashing in on this lucrative corner of the real estate market.  Here are the top tips for Santa Cruz house flippers in today's real estate market.

#1:  Buy at the right price

Most flippers get into trouble by simply paying too much for their flip projects.  In most cases, a flipper in Santa Cruz will need to purchase for no more than 85% of current as-is market value - where, realistically, they could turn around and sell the property the day after they buy it for 15% more than they paid for it.  You need that cushion because when you as the flipper re-sell the property, you'll have to pay a commission, other closing costs, property taxes, interest payments, insurance, etc. - and you need a cushion too in case there's a fluctuation in the market or you over-estimated as-is market value.  

#2:  Leverage owner financing

Many owners who sell to flippers don't need all their cash right away; they may be OK with receiving 20-30% of the sale price upon closing and carrying back a note for the balance for 3-6 months, often interest-free.  This will lower the flipper's cash-out-of-pocket and carrying costs considerably.

#3:  Partner with the Seller

Negotiate a very low price with the seller, but offer to give them a piece of the pie upon resale, effectively making them a silent partner in your Santa Cruz flip venture.  The seller will be much more likely to accept a low sale price knowing that they'll get cut in on the profits of the sale.

#4:  Get testimonials from past sellers

Flipping houses isn't all about making money - it's also about helping people out of sticky situations, where a motivated seller finds the right investor to get them out of an unwanted property.  Get testimonials from these Santa Cruz sellers and put them on public sites like Yelp or your own web site.  Video testimonials are awesome if you can get them too.  Getting sellers to trust you is key to getting your offer accepted.
Posted in Home Buyers, Investing
Dec. 21, 2018

Low-Down Payment Santa Cruz Mortgage Loans

Did you know that for qualified buyers, you can get a Santa Cruz home loan without monthly mortgage insurance payments but still put less than 20% down?  In fact, you can even get a conventional loan in Santa Cruz, with no mortgage insurance, with just 3% or 5% down!

Fannie Mae and Freddie Mac both have a loan program that allows buyers with higher credit scores and strong job history to obtain a loan that is competitive with FHA with the added benefit of not having a monthly mortgage insurance premium. 

This allows Santa Cruz home shoppers to avoid the costly payment of hundreds of dollars a month included in the mortgage. Rates and costs are usually a bit higher on these programs, but well worth it over the long run when you place and compare the two options side by side with another loan program like FHA. 

Mortgage insurance goes by many names: PMI, MIP, MI … but they all mean the same. Mortgage Insurance is added for the protection of the bank. In case the borrower defaults, the private mortgage insurance will pay the bank’s losses in the event of foreclosure. After the Great Recession, banks became wary about lending to borrowers with low down payments, but mortgage insurance changed all that. It really has no benefit to a homebuyer aside of allowing them to access housing, since without it, a bank would not lend with such a small down payment. 

In the No Monthly Mortgage Insurance program, it is still technically being paid, but it’s just rolled into the cost (interest rate) of the loan. 

This is a great option when putting in offers in this competitive market. It gives a buyer another advantage over other buyers that are only qualified for FHA. In general, FHA requires a few more items in regards to property condition and underwriting/approval conditions so a conventional loan is a good alternative when properties need a little work. In addition, sellers in Santa Cruz are more inclined to accept a conventional loan offer as this proves that there is a stronger buyer behind that offer since typically banks require more stable and higher credit along with strong job history to obtain a conventional loan. 

With slowing appreciation in the real estate market, this will be a good option to avoid having to pay mortgage insurance for many years to come.

If you have any further questions or questions on qualifying, please reach out to our preferred mortgage specialist who will be happy to help:  Victor Romero with Santa Cruz Lending, or 831-214-2172.




Dec. 20, 2018

Loan to Replace an Old Manufactured Home in Santa Cruz

Recently I was asked if there is a loan available in Santa Cruz for replacing an old and run down manufactured home in a park with a brand new unit.

In this specific case, the borrower owned an old manufactured home in Santa Cruz (Aptos, actually) which he owed a small amount of money on. It was in a park where the owner also owned the land. It was his primary residence. The land itself was worth more than the loan amount owed. He had good credit but did not have enough money to buy a new unit for cash and have it replaced.

After contacting HUD regarding this (they administer FHA loans) it was determined that they allow for this type of situation in Santa Cruz (and any other county, for that matter). The FHA 203k allows a borrower to replace an old manufactured home and refinance the old loan into the new one as part of the process. This includes the cost to purchase the new manufactured home as well as the placement of the new unit onto the existing foundation of the old manufactured home.

Minimum Home Loan Amounts

As not much was owed, and as the borrower did have some cash to put into the deal, one question that came up was, what is the lowest loan amount a borrower could apply for?

In general, there is no limit for the lowest amount a lender in Santa Cruz will lend you. But a good rule of thumb would be $50,000.

Why is that?

It comes down to a series of complicated rules that the government imposed on lenders. In addition, banks face profit issues with small loans.Minimum Home Loan Amounts

One of these rules is that in general the government stated that you cannot charge a borrower more than 5% of their loan amount in fees to get the loan. These fees include title company fees and processing and underwriting fees (my preferred lender =charges $875 for underwriting and $775 for loan processing, or $1650 combined).

They were looking out to help homeowners not get taken advantage of form unscrupulous lenders. Seems straight forward for a 500k loan not to have fees that exceed 25k right? But what if the loan is 50k, with the title company cost ($900-1700) and standard processing and underwriting fees ($1,650), it’s pretty easy to go over the 5% of 50k or $2,500 and be close to breaking some major rules with the Fed.


Dec. 15, 2018

Santa Cruz FHA Loan Limits Increased for 2019

Good news everyone - Santa Cruz FHA loan limits are back on their way up!  Recently, the Department of Housing and Urban Development (HUD) announced a new schedule of FHA loan limits for 2019.  Most areas in the country will experience an increase in loan limits in the coming year.

See highlights below:

  • Low-cost area limit: $314,827 (increase from $294,515 and still 65% of the national conforming limit)
  • High-cost area limit: $726,525 (increase from $679,650 and still 150% of the national conforming limit)
  • Limit in Hawaii, Alaska, Guam, and VI: $1,089,787 (increase from $1,019,475)
  • Maximum claim amount for HECMs: $726,525 (increase from $679,650 and still 150% of the national conforming limit)

HUD said as a result of "robust increases" in median housing prices and required changes to FHA's floor and ceiling limits, which are tied to the Federal Housing Finance Agency's increase in the conventional mortgage loan limits for 2019, the maximum loan limits for FHA forward mortgages will rise in 3,053 counties. In 181 counties, FHA's loan limits will remain unchanged.

It is important to understand that that while the FHA loan limit in Santa Cruz will be $726,525 for 2019, the maximum purchase price of a home is not limited - merely the size of the loan is limited.  FHA does require a minimum down payment of 3.5%, so with a down payment that size the maximum purchase price would be $752,875.

However, Santa Cruz home buyers can put much more than 3.5% down on a home loan - however even if borrowers put down 20% on a FHA mortgage, the borrower will still be required to pay mortgage insurance for the life of the loan.  Most borrowers with higher down payments will use conventional financing, but FHA loans are the "go to" loan for buyers with smaller down payments.


Dec. 6, 2018

Buying Santa Cruz Bank Foreclosed Homes

Santa Cruz Foreclosure bank-owned REOWhy are so many people interested in buying a Santa Cruz bank foreclosed home?  It's true that everyone wants a new home that will fall within the price range they have in place. Properties, especially those in coastal areas, have very high values and getting these properties at an affordable price is becoming very difficult for many buyers in Santa Cruz.

When you search for homes that meet the characteristics and location you want, you often get discouraged by the high prices. The good news is, you don't have to subject yourself to the costly situation of open market since there are lucrative investment opportunities in bank-owned "REO" foreclosed homes. So, you can opt for bank foreclosure properties when you need a new home with a good discount price.

Bank foreclosure properties in Santa Cruz take the form of repossessions of homes and then re-selling these homes to recoup the losses. When homeowners fail to pay their home mortgage loans, the lender will take over the homes and sell them in order to get the debts redeemed. The value of the homes usually exceeds the debt owed. This means that the lender may undersell the homes and still recover the debt owed. When this happens, the buyer will record substantial gain.

Check on sites like Property Radar and you will access an online database of hundreds of thousands of listings of discount properties nationwide (with many in California and some in Santa Cruz) and also property foreclosures owned by banks. You will not have issues locating these deals in town since we are here to guide you. We'll give you the expert guidance so that you can find the best deals currently available in the market. That is not all, you stand to know how good values are identified and also kill off hidden costs on deals because they are likely going to hurt you afterwards. We have the experience you need to make the best investment opportunity. Our Concierge Services is second to none and we will make sure that you are not left in the dark especially when you have to bring your investment plans into reality. We will be glad if you allow us serve you with experienced investment ideas as you opt for bank-owned "REO" foreclosed homes in Santa Cruz.


Dec. 3, 2018

Substantial Increase in Santa Cruz Home Loan Limits!

The Federal Housing Finance Agency (FHFA) today announced the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2019.  In the county of Santa Cruz, the 2019 maximum conforming loan limit for one-unit properties will be $726,525, an increase from  $679,650 in 2018. 


Baseline limit


The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price.  Earlier today, FHFA published its third quarter 2018 House Price Index (HPI) report, which includes estimates for the increase in the average U.S. home value over the last four quarters.  According to FHFA's seasonally adjusted, expanded-data HPI, house prices increased 6.9 percent, on average, between the third quarters of 2017 and 2018.  Therefore, the baseline maximum conforming loan limit in 2019 will increase by the same percentage. 


High-cost area limits


For areas (like Santa Cruz) in which 115 percent of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit will be higher than the baseline loan limit.  HERA establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a “ceiling" on that limit of 150 percent of the baseline loan limit.  Median home values generally increased in high-cost areas in 2018, driving up the maximum loan limits in many areas.  The new ceiling loan limit for one-unit properties in most high-cost areas (such as Santa Cruz) will be $726,525 — or 150 percent of $484,350. 


Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands.  In these areas, the baseline loan limit will be $726,525 for one-unit properties.

As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum conforming loan limit will be higher in 2019 in all but 47 counties or county equivalents in the U.S.


The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 11 Federal Home Loan Banks. These government-sponsored enterprises provide more than $6.2 trillion in funding for the U.S. mortgage markets and financial institutions.


Rates for mortgages in conforming range are normally about 0.25% better than High Balance mortgage rates. Both conforming and high balance loans (compared to Jumbo Loans) are regularly easer to qualify for, more forgiving if borrowers do something they should not (for example cash deposits or acquiring new debt) and usually carry less restrictions on property compared to Jumbo loans.


Here is a quick comparison along with the breakdowns for the surrounding counties. Please feel free to reach out to our Santa Cruz Home Loan Advisor for any specific questions.  These new increases home home loan limits will help many buyers of Santa Cruz Real Estate achieve their dream of home ownership.


Surrounding counties new 2019 Limits:


Santa Clara, San Benito counties:


$484,350 Conforming

$726,525 High Balance


Monterey County:


$484,350 Conforming

$652,050 High Balance