Santa Cruz Real Estate Articles

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

Sept. 17, 2019

Santa Cruz Down Payment Assistance is Here!

Up to $265,228 down payment assistance program with no payments required in Santa Cruz County!


The state of California’s HOME investment partnership program (HOME for short) offers down payment assistance funds available for qualified first time home buyers planning on purchasing in Santa Cruz County. Eligible first time home buyers can apply and get approved for up to $265,228 towards a down payment on their next purchase, often referred as a silent second loan. It is meant to help entry level homebuyers qualify to purchase at an affordable housing payment. There is NO PAYMENT required for up to 30 years!

The maximum purchase price is currently limited to the 500K range (last year was 496K) so it is a great option for condos or smaller single family dwellings. They need to be in habitable conditions and meet all health and safety requirements for the county. Old carpet and paint are fine, what they are more concerned with are health and safety issues.

In the past, the silent second loan program would require equity share with the buyer. They did away with this option and now the allocate a low simple interest rate of 1% for 30 years. As a homebuyer utilizing this program it is possible to have monthly payments set up to pay off the debt if that is an option preferred by the homebuyer. Since no payments are required, most borrowers utilize additional principal payments they would typically use towards paying off the debt to be used to pay off higher interest rate debt such as high interest credit cards or car loans.

Since this is to promote homeownership, the buyer would need to occupy the home during the entire term of that loan unless they refinance and pay it off. The loan becomes due once the buyer sells the property. The county of Santa Cruz will request their funds be paid back upon close of escrow as the silent second loan is secured by a deed of trust.

Sept. 15, 2019

How to Buy a House in Santa Cruz

Yes, YOU can buy a home in Santa Cruz!

Many people would love to own a home in Santa Cruz County, but they take a look at the home prices and go into shock. To most people, it seems impossible that anyone but the very rich could afford to buy property here. This article will show that where there’s a will, there’s a way to become a home owner here in Santa Cruz. The first home you buy may not be your dream home – but it’s an important, and surprisingly affordable, step on the path to getting there.

This is a long article, and it is broken up into sections. I suggest you read this article in its entirety, but for reference purposes, here are the sections:

Cash and Credit

Loan Rates and Types

Tax Benefits

Example Purchase with 100% Financing

House, or Condo?

Mobile Home

Buying Land + Building

Searching for a Home

Properties to Avoid</a?

Where the Affordable Homes Are

Get Help!

Cash and Credit

The first thing to know is that maybe you can’t buy a home today. Depending on your situation, it may take some preparation. You may have heard about 100% financing – and it’s out there, although it’s not as available as it was in years past. Today, 100% financing is available via USDA loans and also VA loans, however there are significant limitations on the use of those loans. More typically, buyers seeking 100% financing will use a combination of a FHA loan and a down payment assistant program like California's MyHome Assistance Program. Most commonly, however, buyers today don’t use 100% financing; a very popular loan today is a FHA loan, which requires only a 3.5% down payment.

Even if you do use 100% financing, you will still need some cash (at least 3% of the purchase price, typically) to purchase property here – for your “earnest money deposit.” When buyers are scarce, sellers may accept less in the way of an earnest money deposit, but 3% is what most sellers expect to see.  You will also need some money for your closing costs, and your lender may require some “reserves” as well (enough money saved somewhere for, say, 1 year of payments in the event of a job loss, for example).

Your closing costs will vary considerably depending on a number of factors – a loan origination fee, pre-paid property tax and insurance, up-front mortgage insurance premium, pre-paid interest, discount points, etc. – you should allow about 2% of the purchase price for these closing costs, but they could be higher or lower by 1% either way. Please know though that it is possible to, in effect, finance these closing costs if the seller will issue you a credit for these closing costs.

So if you have absolutely no cash, start getting some together now. This might be easier than you think, though. You may be able to borrow against your 401k plan if you have one. You can liquidate an IRA. You can get a gift or a loan from your family. You might also consider doing an equity share – find someone to provide you with the down payment, in exchange for a small ownership stake in the property. There are many creative ways to get sufficient cash together.

How is your credit? You can pull a credit report yourself from many sources online (everyone gets one free credit report per year; you can check However, my advice is to start talking to a Mortgage Broker (loan officer) as soon as possible. Very likely, he or she will pull your credit report for free. The Mortgage Broker will go over your report with you, and talk about ways to improve your credit score if it is low. Credit scores will rise over time, so long as you address the issues which are dragging your score down. In six months or a year, it’s very possible you could raise your score to the point where you can get a loan at a rate low enough to make your mortgage payments affordable. The good news is that your credit score may not need to be very high – some lenders will do FHA loans with a score as low as 580 (although others will require a 620 or higher).

Your Mortgage Broker (loan broker) will be able to supply you with a key instrument in buying property: a pre-approval letter. This is a "guarantee" of a loan for a certain amount of money, subject to approval of the collateral (i.e., the property you want to buy). That is, before the lender actually gives you the money, the lender will have an appraisal done on the property, to ensure that it is at least equal to the value of the amount being loaned. But if the property appraises, and if nothing significant has changed in your financial picture between the time you were approved and the time the loan funds, you should get the loan.

Armed with a pre-approval letter from a lender and at least 3% of the purchase price of a property in cash, you will be in an strong position to purchase a home.

Where does that 3% come into play? You’ll need at least that much even with 100% financing. You will typically need 1% of the purchase price for “earnest money.” You pay that immediately after the seller has accepts your offer. You will then have a period of time (the “contingency period”) to inspect the house to make sure you know what you are getting. When you release your contingencies, you are committing to buy the house. At that time, you will typically increase your deposit an additional 2% of the purchase price, to a total of 3%. During the contingency period, you will need some additional money to do inspections: home inspection, termite inspection, septic inspection, etc.

Loan Rates and Types

Many people are fixated on, well, 30 year fixed rate mortgages. But what are the odds that your first home will be one you live in for 30 years? The average home owner moves every five to seven years – so why focus on a 30 year fixed rate? Many people want a 30 year rate because rates are very low at this time, and they want to lock in a low rate as it’s possible that money will never again be as “cheap” as it is right now. However, there are some mortgage options which may result in a lower rate – such as an interest only option ARM (adjustable rate mortgage), for example. These kinds of loans are considered “exotic” and have fallen out of favor, but just know that there are other kinds of loans out there which you may qualify for and which may make more sense for you depending on your particular situation. Remember, with a fully amortized 30 year loan, very little of the principal is paid off in the first seven years or so. Historically, the bulk of the equity you will build up in that time period will come from appreciation in your home’s value, not from paying back the principal on the loan.

Tax and Financial Benefits

You should consult with a financial or tax planner before purchasing real estate. Everyone’s tax situation is different. In the next paragraph, I will explain how the tax system can benefit you, but you should definitely speak to a certified professional before buying a home.

Historically, the Federal tax code has provided strong incentives for home ownership.  Unfortunately, President Trump's 2017 Tax Cuts and Jobs Act significantly reduced those incentives, to the point where the tax benefits of highly leveraged and expensive homes do not pencil out favorably vs. renting a similar home in most cases.  There are many reasons to own your home, of course - but at the moment, the tax benefits are not one of them.

While the tax benefits afforded to home ownership are fairly negligible for California home owners, there are many other benefits that make it a smart long-term investment.  For example, if you get a 30-year fixed rate mortgage, your housing costs for the next 30 years will be fairly constant, with only a very gradual rise (your property tax will rise by no more than 2% per year, and your home insurance will rise too) - while renters can expect the cost of rent to increase right along with the inflation, ad naseum.  Home owners have 35-44x greater net worth than do renters, and this is one of the key reasons for it.

An Example Purchase with 96.5% Financing

This is an example of the first year of payments. If you have an adjustable rate mortgage, the rate you pay may change up or down, capped within a certain range and certain rate of change per given period (year).

Purchase Price: $400,000

Loan $386,000 @ 3.75% interest rate (96.5% of purchase price)

$1,788 per month – principal & interest

$417 per month – property tax (@ 1.25%/year)

$273 per month – FHA mortgage insurance(@ 0.85%/year)

$80 per month – Homeowner’s Insurance

Total Principal, Interest, Tax, Mortgage Insurance, Homeowner’s Insurance: $2,558

How much more or less than this are you paying now in rent?

There are tools and resources (such as Microsoft Excel® spreadsheets) for this sort of thing in the Resources section of my web site.

House, or Condo?

It’s the American Dream to own a house – most people don’t dream of owning a condo. There are two big things people don’t like about condos. The first is that you have neighbors living above, below, or on either side of you. That’s usually an inescapable fact of condo living. But if a condo is your first home, realize that it isn’t a prison. It’s a vehicle towards greater wealth through appreciation in the value of your condo (and "forced savings" of your principal payments). The equity you build up in your condo can be converted in a few years to a down payment on a house.

The other thing people tend not to like about condominiums is the Homeowner’s Association fee. These fees typically range between $200 and $500 per month. Where does this money go? A huge chunk of it goes to pay for insurance. At the very least, your condominium will have fire, liability, and, many times, earthquake insurance. Except for earthquake insurance, you will have to pay this money when you buy a single-family residence. Most of the rest of the HOA fees go to pay for maintenance of the exterior (roof, paint, etc.) and of the common areas (landscaping, etc.). This money is not money down the drain, though: it serves to keep your investment in good condition, so that it maintains its value and is easy to sell when it’s time to move up.

What about a mobile home?

Mobile homes are an option to consider. However, mobile home loans may require a down payment as high as 30%! If the mobile home costs $200,000 – you may need as much as $60,000 down. There are mobile home loans that don’t require so much down – but they will be for mobile homes manufactured after 1977 (or newer, depending on the loan program), will require that the home be a double-wide (as opposed to a single wide), etc. Also, you don’t usually own the land under the mobile home – if you do, it will cost easily more than $200,000. And even if you do own the land, there will still be a monthly park fee. If you don’t own the land under the mobile home, it isn’t considered to be “real” property – it’s personal property, and is more difficult to get a loan against it compared to a home. And of course, in this situation, you will have a monthly park space fee.

Buying Land

Many buyers in the idea think they can save money by buying land and building a house on it. Most folks are looking for land going for $100,000 or so. However, any piece of land in this price range will require a substantial amount of development before it can be built on – perhaps another $100,000 or $200,000 on top of the initial purchase price. Or, you can buy some land in the $300,000 range that’s (more) ready-to-build. But land loans are very hard to come by, and if you can find one, will typically require 30% down – you will need $100,000 cash (typically, unless there is owner financing) to buy a $300,000 piece of land. Building a house costs around $300 per square foot – perhaps $400-$500 per square foot for a challenging site and/or higher quality materials or amenities. Yes, you can put a manufactured/mobile home on some land, and you can even do a yurt – but the county will require all the other things a house needs, such as a well, septic system, good road for emergency vehicles, etc.

In summary, buying and building is definitely an option…for people with a lot of money to put into the project. If you’ve only got a little bit of cash, buying a pre-built structure is definitely the most practical path towards home ownership.

Searching for a Home

Once you’ve got enough cash together and have secured a pre-approval letter from a lender, you will know what properties you can afford to buy. How best to locate a home? There are property magazines, you see them everywhere. Locally, the two big ones are Santa Cruz County Homes, and Coastal Homes Magazine. These are glossy publications that catalog many wonderful properties. However, these properties tend to be the more expensive homes on the market, since ads in these magazines are relatively expensive. Also, the publishers of these magazines will require that Realtors place the ads 30 days before the magazines come out. Therefore, much of what is in the magazines is already sold. Another place to look, of course, is Craigslist, as there you will find some “For Sale By Owner” listings you may not find anywhere else.

However, clearly, the best way way to find a home these days is by searching the MLS on the Internet. If you're looking to find an affordable home in Santa Cruz online, this page is a good place to start.

Properties to Avoid

When there are few properties on the market in your price range, you may be tempted to buy a property with some less-than-desirable characteristics. I recommend that you always buy with the idea that one day you will sell the property, and the market you sell it in may be different than the one in which you bought. When it comes time to sell, which properties will sell first – those with few negatives, or those with several? Properties with these negative characteristics will take longer to sell, and/or will sell for a lower price, than properties without. Here are some things you want to avoid:

Two-story houses: as people get older, they tend not to like going up and down stairs. The population is aging; five years from now, it will be even older. Single-story houses sell faster. If you are going to buy a two-story house, try to find one that has at least one bedroom on the first floor – preferably the master bedroom.

Not on a hill: houses on hills are often two story houses, or if they aren’t, they will usually have stairs leading to the front door. Again, older people don’t like that. Also, the lot is usually sloped. People prefer their yards to be relatively flat.

Busy streets: avoid houses on busy streets. Busy streets are noisy, and they can be very dangerous for families with children. Try to find a nice, quiet street. In that same vein, don’t buy a property next to a freeway. They can be very noisy as well.

Utilities & facilities: is there a sewage treatment plant nearby? How about a utility pole in your back yard, or worse, a PG&E transformer? Is the house down the street from a warehouse that has lots of big trucks rumbling down the street early in the morning? These are properties you want to stay away from.

Where the affordable homes are

Fresno! Stockton! The Central Valley. But that’s kind of a long commute. Most home buyers would like to buy in the cities of Santa Cruz or Capitola, or other mid-county areas such as Soquel, Live Oak, and Aptos. And because everyone wants to buy there, properties are relatively expensive in those areas.

Many affordable properties are to be found in the San Lorenzo Valley: Felton, Ben Lomond, Brookdale, and Boulder Creek. People tend to think of these places as being remote. Boulder Creek is the farthest out, but it’s only about 20-25 minutes to Santa Cruz – and only 35-45 minutes away from San Jose. Felton is the closest “to town” – just minutes away from Ocean Street in Santa Cruz via Graham Hill Road, or River Street in Santa Cruz via Highway 9. It’s also very close to Scotts Valley (and then to Highway 17) via Mount Hermon Road. It’s not as far away as you might think, and it deserves serious consideration for first time or low income buyers.

Watsonville is another affordable area in Santa Cruz County. There are many grand old houses there, and it’s got a lovely town square. The land surrounding Watsonville is beautiful, abounding with meadows, lakes, rivers, and creeks. It’s also the growth area for the future of Santa Cruz, since it’s the only area in the county with lots of flat land. But the city of Watsonville is determined not to be a bedroom community. With the increase in housing will come additional office, retail, and light industrial space (i.e., jobs). Expect property in Watsonville to experience handsome increases in value down the road.

Right across the Pajaro river from Watsonville is North Monterey County: Prunedale, Royal Oaks, Moss Landing, etc. These areas have many affordable properties, many of them just a few low-traffic miles south. This area deserves your consideration as well.

Get Help!

As you can see, there’s a lot to consider when buying a property. Engaging the assistance of a Realtor to help you get into a home will save you a lot of time and worry, and might keep you from making a costly mistake. I encourage you to contact me to discuss the market and your options

Posted in Home Buyers
Aug. 27, 2019

Credit Reports and Scores for Santa Cruz Home Buyers

Why does my credit vary so much between the credit score a lender pulls and the credit score I get from my credit card or free online credit tracking app?

As consumers, we have access to credit scores by many means, from:  apps, free tacking from bank account or credit card companies, free yearly credit reports from the government and mortgage credit reports. With so many different sources, a common question is why does credit score differ with every system used?

There are essentially two types of credit reports that are commonly generated: the Mortgage credit report and the Consumer credit report. 

A mortgage credit report is a report pulled by a mortgage company that is considered a hard inquiry and generates typically 3 credit scores. 

A consumer credit report is a credit report that is pulled by either a consumer or a company that may be offering credit on a consumer level. This includes car loans, credit cards, personal loans, etc.  This may be a hard inquiry as well. It may report three scores or less.  

Mortgage credit reports typically look for different aspects of debt management versus consumer credit reports, which are more focused on consumer goods/history and behavior. The differences can be very significant, with circumstances ranging up to 50 points between the mortgage credit report and the consumer credit report.  

Free monitoring systems, which include apps, credit cards, bank accounts, etc track credit differently than getting a consumer credit report. This is due to the way they obtain information. Typically, they obtain their information through what is called a soft inquiry. This soft inquiry will not give them a credit score, they are only given raw data. These companies then attempt to mimic the credit score model to attempt to come to their own credit score to offer their clients. 

Lastly, credit is very fluid. Swings of 30+ points are possible depending on spending habits for a particular month or two and when they actually report to the credit bureaus. In addition, when a revolving account that is typically paid off at the end of the month reports the highest balance to the bureaus, the bureaus then calculate a lower credit score due to this higher balance. This may not be a good representation of credit should the habit shows continuous liquidation of balance month after month. 

When getting pre-approved for a Santa Cruz home loan, always make sure you are getting your credit report and score from by a mortgage company offering mortgage credit report services. This will confirm that the scores are valid to obtain a mortgage loan.  


Aug. 11, 2019

Buy a Home in Santa Cruz with No Appraisal and 5% Down!

Recently there have been more home loans closing in Santa Cruz, without the need to obtain an appraisal. The reasoning behind this is that the large purchasers of all mortgages, Fannie Mae and Freddie Mac (government-sponsored entities), have been putting together databases where they have been tracking Santa Cruz county property sales along with the property characteristics for years now. Amongst all the information they collect, we know they have been keeping track of bedroom count, bathroom count, square footage of the homes, any upgrades, and quality of construction. This has allowed them to amass a large amount of information from properties across Santa Cruz and the country. 

 When borrowers go into a bank to obtain a loan, the bank very routinely offers a loan to the borrower that will be eventually purchased by Fannie Mae or Freddie Mac. Over 70% of all mortgages are secured this way. By the bank doing this, they can check if the property for which the loan is being applied for is within the scope of data collected by the agencies. If the data shows that the value is within a “reasonable range” and there is sufficient information regarding property sales in the area, they will issue what is called a Property Inspection Waiver or PIW for short. The PIW allows a bank to close the loan without the need for an appraisal as this requirement has essentially been met with this waiver. 

In order to obtain a PIW, the complete loan file must be run through Fannie Mae/Freddie Mac system to confirm that it is acceptable. If there is no appraisal required, the buyer or borrower of the property in Santa Cruz still has the ability to request an appraisal if they wish to do so. False beliefs are that a larger down payment or higher credit score would allow the PIW to be issued, but this is not correct.  

In general, all this is done to make it easier for buyers to be able to buy a property. It’s an example of how the lending industry is using technology to make the experience much more efficient for borrowers, allow for fewer obstacles and ultimately get more people into homes. 


July 30, 2019

Buying a 4 Unit Property with 0% Down in Santa Cruz

Buying a multi-family property in Santa Cruz has become more common as both an affordable place to live and great investment vehicle for future retirement. When purchasing a 2- 4 unit property, banks typically require 25% down payment, and 6-12 months payments in reserves. In addition, it requires great credit and a history of receiving rents as a landlord. 

The Department of Veterans Affairs or "VA" for short provides great loan options. If you are a qualified veteran you may be eligible to obtain a VA loan.  VA does not require a down payment for their home loans if purchased under certain loan amounts. They have great rates and no private mortgage insurance. Rates are by far some of the best in the mortgage industry. VA does not increase the rate when buying a four unit property in Santa Cruz vs. buying a single family residence, as seen in many other loan programs. 


The VA also allows for Vets to purchase multi-unit properties in Santa Cruz (2-4 unit properties are eligible) so long as the Vet occupies one of the units. VA allows for the same flexible guidelines as they do on their single family residence loans. As a veteran purchasing a four unit property, one of the biggest advantages is being able to use a percentage of the other three units rental income to help qualify. They require six months reserve to obtain the loan. They also allow a borrower to have less than perfect credit scores (some banks allowing down to a 580 credit score!). 

Maximum loan amounts for the program when wanting to use the 0% down feature is $726,525 (in high cost areas like Santa Cruz County). For Vets who wish to buy above this limit when living in high cost areas like California, VA has made it easier for them, allowing for loan amounts over 1.5MM with as little as 12% down payment (it is a sliding scale for the down payment when moving up from $726,525, please check with your lender).  

The process to purchase a four unit property is straight forward. First you need to get pre-approved from a VA approved lender. Obtain your certificate of eligibility (some lenders can request this for you). Give your loan officer the property information so that they can confirm the property meets VA requirements. At this point you are ready to get in contract. 



Posted in Home Buyers
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